Bunting v Juratowitch: IMO the estate of Isabella Ballard, deceased
[2019] VSC 343
•29 May 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 01068
IN THE MATTER of an application for judicial advice in respect of the will of Isabella Ballard, deceased
- and –
IN THE MATTER of an application pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules 2015
| SHARON MARY ISABELLA BUNTING (in her capacity as Executor of the Will and Estate of Isabella Ballard, deceased) | Plaintiff |
| v | |
| DANIEL P. JURATOWITCH (in his capacity as Trustee of the Bankrupt Estate of Dennis Alexander Ballard) | First Defendant |
| NIGEL JOHN BALLARD | Second Defendant |
---
JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Written submissions filed by the plaintiff on 8 April 2019 and by the first defendant on 9 April 2019 |
DATE OF JUDGMENT: | 29 May 2019 |
CASE MAY BE CITED AS: | Bunting v Juratowitch: IMO the estate of Isabella Ballard, deceased |
MEDIUM NEUTRAL CITATION: | [2019] VSC 343 |
---
WILLS – Construction – General principles of construction of wills – Re Melbourne; Wall v Wathen [2016] VSC 514 and Fell v Fell (1922) 31 CLR 268, considered and applied – Section 34 of the Wills Act 1997 (Vic) – Where the property cannot be subdivided in accordance with the testator’s intention – Garbett v Bear [2015] NSWSC 1524, referred to – Where gift did not exist in a transferrable form – Gift fails for uncertainty – Bakranich v Robinson [2005] WASC12 referred to– Alternatively, principle of ademption applies – Re Blake [2009] VSC 184 referred to – Gift fails and falls into the deceased’s residuary estate – Whether the gift is in addition to the beneficiary’s one-third share of the estate.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Miller | Sinisgalli Foster Legal Pty Ltd |
| For the First Defendant | Mr P Fary | Gadens Lawyers |
| For the Second Defendant | Goldsmiths Lawyers |
HER HONOUR:
The plaintiff, Ms Sharon Bunting (‘executor’), is the executor of the Will of her late mother, Mrs Isabella Bunting (‘deceased’). The deceased died on 2 February 2010, leaving a will dated 6 May 2003 (‘Will’). The deceased left assets valued at $4,663,641.66, with liabilities of $404,573.08. The beneficiaries of the Will were the executor, and her two brothers, Dennis Ballard (‘Dennis’) and Nigel Ballard. Dennis’ affairs are subject to the control of his trustee in bankruptcy, Mr Daniel Juratowitch (‘trustee’). The trustee is the first defendant in this proceeding, and the other beneficiary, Nigel Ballard, is the second defendant.
In this proceeding, the executor seeks judicial advice as to the proper construction of the Will, insofar it concerns a significant asset of the estate, being a thirty two acre[1] property in Baxter, on the fringe of metropolitan Melbourne (‘Baxter property’). The Baxter property is described in the probate inventory as a property ‘with a weatherboard dwelling of 10 rooms (‘old house’); a weatherboard dwelling of 8 rooms (‘new house’); a weatherboard dwelling of 4 rooms; machinery and sundry shedding; a church … valued at $2,000,000.’ The Baxter property is in the Green Wedge Zone, which, at least for the foreseeable future, prevents its subdivision. The new house is occupied by Dennis and his family. The new house was built by the deceased in about 2008 or 2009 (after she made the Will). Previously, Dennis had lived in the old house, which the deceased occupied prior to her death. While some of the paddocks on the property are fenced, there is no fence separating the old house and the new house, which are located approximately 200 metres apart. The executor now lives in the old house, and runs some cattle on the Baxter property.
[1]At the time the Will was made, the Baxter property was approximately forty acres in size. In 2010, approximately eight acres was compulsorily acquired for the Peninsula Link Freeway, with the estate receiving compensation of $516,819.76.
On 4 December 2017, the trustee issued a proceeding in this Court seeking the removal of the plaintiff as the executor. That proceeding has been mediated, but not resolved. The advice to be provided by the Court in this proceeding may assist in resolving the issues in the other proceeding.
The relevant clauses of the Will are as follows:
Clause 5 of the Will reads as follows:
I direct that as part of the inheritance which he is to receive under this my Will my said son Dennis Alexander Ballard shall be entitled to have transferred to him five acres on which his residence is erected on the property comprising approximately 40 acres registered in my name in Baxter.
Clause 6 of the Will reads as follows:
I direct my Trustee to sell in collect and convert into money such part of the residue of my estate as shall not consist of money including the balance of approximately 40 acres at Baxter referred to in clause 5 of this my Will with power to my Trustee to postpone the sale calling in or conversion of the whole or any part of parts of my said estate for such period as my Trustee shall think proper and after payment of all my just debts funeral and testamentary expenses and all duties and taxes payable in respect of my estate both actual and notional or occasioned by my death or the administration of my estate so as to exonerate all persons from payment thereof or contribution thereto and to hold the balance of my estate (herein called ‘my residuary estate’) upon the following trusts:
(a)to pay one-third thereof to my said son Dennis Alexander Ballard absolutely including 5 acres of land at Baxter referred to in clause 5 of this my Will;
(b)to pay one-third thereof to my said son Nigel John Ballard;
(c)to pay one-third thereof to my said Sharon Mary Isabella Bunting absolutely.
In her originating motion filed on 14 March 2019, the executor seeks the following:
Pursuant to the Orders of the Court dated 1 March 2019 in proceeding S CI 2017 04906, the Plaintiff seeks the advice, opinion and direction of the Court, pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules 2010 (Vic) with respect to the proper construction of Clause 5 and Clause 6 of the Will of Isabella Ballard dated 6 May 2003 (‘the Will’) and in the events that have happened answers to the following questions where appropriate:
1.By a synergistic reading of Clauses 5 and 6 of the Will, did the deceased intend to subdivide her 40 acre property at Baxter and transfer absolutely to Dennis Alexander Ballard (‘Dennis’) the 5 acres of land on which his residence is erected?
2.If the answer to question one (1) is ‘yes’, does the gift to Dennis fail as:
(a)the 5 acres of land referred to forms part of the original 40 acres of estate land shown on Certificate of Title Volume 8231 Folio 420 (‘the estate land’);
(b)in 2010 some 8 acres of the estate land were compulsorily acquired by The Southern and Eastern Integrated Transport Authority from the 40 acres of estate land for the Peninsula Link Freeway thereby leaving 32 acres of estate land;
(c)the 5 acres of land on which Dennis’ residence is erected are located within the remaining 32 acres of estate land but their location, dimensions and configuration are not shown on Certificate of Title Volume 8231 Folio 420 or any other Certificate of Title;
(d)the 5 acres of land are located within the 32 acres of the estate land which is in a Green Wedge Zone, under the Mornington Peninsula Planning Scheme, which prohibits subdivision of the 32 acres of estate land into parcels of land;
(e)the 5 acres of land forms part of the estate land which cannot be subdivided and a separate title to the 5 acres of land cannot be transferred to Dennis by the Executor of the Will.
3.Alternatively, if the answer to question one (1) is ‘no’, that is, the testator’s intention cannot be given effect, by the transfer of the 5 acres of land to Dennis then does this gift:
(a)go to Dennis absolutely; or
(b)fall into residue and is governed by Clause 6 of the Will?
4.Whether by Clause 6 of the Will does the residue of the estate include the 5 acres of land referred to in Clause 5?
5.Whether by Clause 6 of the Will is Dennis entitled to:
(a)the 5 acres of land plus one third of the residuary estate, that is after excising the gift in Clause 5; or
(b)one third of the residuary estate which includes the 5 acres of land?
6. In exercising the power of sale under Clause 6 should the Executor:
(a)obtain, from a Certified Practising Valuer, a valuation of the 32 acres of estate land on which two dwellings are constructed; and
(b)obtain, if possible, a valuation from a Certified Practising Valuer, a separate valuation of the five acres of land on which one dwelling is constructed?
7.An order providing for the costs of this proceeding be paid out of the estate.
The parties agreed on 26 March 2019 that the issues in the proceeding are suitable for determination ‘on the papers’. The parties (save for the second defendant, who is content to abide by the determination of the Court) filed written submissions on 8 April 2019 and 9 April 2019. The only evidence in the proceeding was the affidavit affirmed by the executor on 14 March 2019. In addition to the background matters referred to above, the executor deposed that she has been informed by her legal advisors that it is not possible to subdivide the Baxter property, which is in a Green Wedge Zone, such that subdivision of land of less than forty hectares is not permitted. She deposed that she has been advised that the Baxter property is unlikely to be rezoned in the foreseeable future. The executor also deposed that, in accordance with orders made by McMillan J on 14 October 2018, she sought advice from Mr Richard Boaden of counsel with respect to the construction of clause 6 of the Will. However, the executor considers that, in his advice, Mr Boaden has failed to take into account the fact that the Baxter property cannot be subdivided.
The executor also gave evidence that, in 2003, at the time she made the Will, the deceased told her that she believed she could subdivide the Baxter property and give five acres to Dennis, upon which she would have a house built for Dennis and his family. The use to which this evidence can be put is discussed later in these reasons.
The relevant sections of Mr Boaden’s advice provided on 14 October 2018 are extracted below:
On the basis that the power to postpone has run its course and should now no longer lead to delay in completing the administration, the situation comes down to this:
(a)The Will includes an immediate and absolute gift of roughly 5 acres of land to Dennis.
(b)The trust to sell and convert the residue into money applies to the balance of the 30-32 acres of land remaining (in the Green Wedge), but not to the 5 acres which the Will destined for Dennis.
The fact that the precise metes and bounds of the land given to Dennis is not specified in the Will does not create any relevant uncertainty. Clearly (as can be seen from the terms of the Will themselves) the testatrix trusted her executrix to work out these details. There is no fencing, but the curtilage to Dennis’s home coupled with the specification of the gift as being ‘the five acres on which his residence is erected’, is an adequate and sufficient measure.
The present position is, therefore, that Sharon has to administer –
(a)an immediate gift of what may, for convenience, be viewed as a straightforward gift of 5 acres of land; coupled with
(b)a direction that the remaining land be sold, and the proceeds of sale be distributed to the three children of Mrs Ballard;
in circumstances where it is not possible for the 5 acres of land to be transferred separately to Dennis.
The gift of the 5 acres to Dennis does not fail. But nor can it be perfected by a transfer in specie. The entire 30-32 acres of land are vested in Sharon as the trustee. The requirement of the Will trust is therefore that the entire 30-32 acres of land be sold and converted into money. The net proceeds must then be apportioned into two parts: one part will be an appropriate proportion of the entire net proceeds of the sale, representing the value of the (improved) 5 acres which were destined for Dennis; the other part will be the balance of the net proceeds.
…
The power to postpone completion of the administration which is contained in paragraph 6 of the Will does not authorize indefinite postponement of that completion. The power is there chiefly for the benefit of the estate. The facts indicate that there is unlikely to be any benefit to the estate in further delaying completion of the administration, and it would seem that this should now take place.
The gift of (5 acres) of land to Dennis is necessarily uncertain, but that does not mean that the gift fails. The extent of the land intended to be given should be able to be assessed by application of the guides given by the two parameters mentioned in the Will – the area being approximately 5 acres, and the reference to the curtilage to Dennis’s home.
Since the 5 acres of land cannot be excised and transferred to Dennis, and the rest of the land does have to be sold, Dennis’s land must be sold as part of the parcel being put on the market. (The same will apply to the home in which Sharon herself is living: unfortunately the Will does not give her any compensation for what will entail for her the loss of her home, and she will be left with just one‑third of the proceeds of sale of the land after subtracting the value of Dennis’s 5 acres.)
Once the sale is completed Sharon will have to distribute to Dennis’s trustee in bankruptcy a share of the net proceeds of the sale representing the value of ‘his’ (improved) 5 acres as a proportion of the total proceeds of the sale. The balance will be distributed equally to herself, in three equal shares to Nigel, and to Dennis’s trustee in bankruptcy.
On 22 November 2018, Mr Boaden provided a further advice regarding the gift to Dennis in the Will. In his view, the gift to Dennis of the five acres was in addition to a one‑third share of the residue, but went on to say as follows:
In the end there is no construction of the Will which can be said to be, in absolute terms, either certainly correct, or certainly incorrect. The Will is clearly ambiguous. Evidence of surrounding circumstances could be admitted pursuant to s 36 of the Act to assist in the interpretation of the language. The same set of words can, very often, mean one thing to one person and something different to another reader. The only absolutely correct construction is that which a judge, or perhaps three judges on appeal, happen to think is correct. So whilst recognizing that there is some degree of uncertainty or ambiguity about the Will, I have to say that I think the Will gives Dennis the 5 acres plus one third of the balance, but others might not necessarily agree.
The submissions filed on behalf of the executor identified the issues in this proceeding, as follows:
Whether the deceased intended, in 2003, pursuant to Clause 5 of the Will, to subdivide her 40‑acre property (‘the Baxter property’) and transfer therefrom the 5 acres of land on which the residence is erected of her son Dennis Alexander Ballard (‘Dennis’), as part of his inheritance?
If yes, if that was the deceased’s intention, can the Executrix-Trustee of the Will give effect to this gift by transferring to Dennis, 5 acres of land and the residence that was on the Baxter property in 2003 and in which Dennis lived at the time?
Can the Executrix-Trustee give effect to this specific gift in Clause 5, when the whole of the deceased’s land is in a Green Wedge Zone, Schedule 2, of the Mornington Peninsula Planning Scheme, which prohibits subdivision of the deceased’s land and precludes the creation of a new Lot for the 5 acres of land, or, does the gift of the land and a residence fail and fall into residue?
Alternatively, if the gift of land and a residence does not fail, is Dennis entitled, in lieu of the gift in specie, to the value of his gift together with one third of residue pursuant to Clause 6 of the Will?
If the 5 acres of land on which his residence is erected falls into residue and the whole of the deceased’s land is sold, pursuant to Clause 6, is there to be an apportionment of the net sale price into two parts: with Dennis receiving the value of the 5 acres and the residence, plus one third of the residue, or, solely one third of the residue with his siblings each receiving one third of residue?
The executor submitted that, given that the terms of the Will provide for Dennis to be provided with land upon which he no longer lives, it is open for the Court to find that the Will makes no sense. Accordingly, extrinsic evidence of the deceased’s intention is admissible under the ‘armchair’ principle.[2] Further, evidence of the surrounding circumstances is admissible under s 36 of the Wills Act 1997 (Vic) (‘Act’) to assist to resolve any ambiguities regarding the meaning of the Will.
[2]See the discussion of Re Melbourne in paragraph 22 of these reasons.
The executor submitted that the words in clause 5 of the Will should be given their plain and ordinary meaning. However, the terms of clause 6 of the Will are ambiguous as to what benefits it confers upon Dennis. In particular:
Did the testator intend Dennis to receive the benefits of the land and house package, and, one third of her residuary estate, or, was the value of the house and land package to be included as part of Dennis’ one third entitlement so that there was an equal distribution of the residuary estate between the three children?
The executor submitted that, on the basis of the extrinsic evidence, the deceased did not intend to give Dennis the old house and the surrounding five acres, but intended to give him the new house and the surrounding five acres.
The executor submitted that it is open to the Court to find that the gift to Dennis fails on the basis that it is adeemed, or void for uncertainty. The executor submitted that the following matters supported a finding that the principle of ademption applies:
(a)the 5 acres of land referred to in Clause 5 did not exist as a separate legally transferrable parcel of land at the date of the testator’s death;
(b)the gift of the 5 acres of land was a specific gift which did not exist at the date of the will or at the date of death of the testator;
(c)if the property did not exist at the date of death of the testator it did not form part of the testator’s assets to be distributed by the Trustee;
(d)the prospective gift of the 5 acres of land was conditional upon certain conditions occurring including: a subdivision of the 40 acre Baxter property to create the 5 acre Lot, the application for a new Certificate of Title, the registration of a new Certificate of Title, and the Transfer of the new Lot to Dennis. None of those contingencies were fulfilled;
(e)the deceased did not at her death have Title to transfer 5 acres of her land to Dennis;
(f)there is nothing in her estate which even substantially answers the words of the gift.
Alternatively, the executor submitted that the gift in the Will is void for uncertainty, on the basis of the following matters:
(a)it is impossible to say with precision what portion of the 32 acres of the Baxter land Dennis was to receive as his 5 acre entitlement. There is no description or identification of this land in metes and bounds as a defined position on the terrestrial globe in any document;
(b)the parcel of 5 acres cannot be identified as no plan of its configuration, whether as a square, a rectangle or otherwise, exists;
(c)there is no boundary fence or barrier around the new house identifying the curtilage of the new house;
(d)the 5 acres of land on which the new house is erected are located within the remaining 32 acres of Estate land, but their exact location, dimensions and configuration are not identified on any Title document.
Accordingly, the executor submitted that the five acres being the subject of the gift is incapable of identification or precise location.
The executor submitted that as the gift was a gift in specie, Dennis is not entitled to the value of the gift in money. The executor submitted that the gift of the land and the dwelling ought fall into residue, with the distribution of the residuary estate to be governed by clause 6 of the Will. The executor submitted that the proper construction of clause 6 of the Will is that Dennis’ one third share of the residuary estate is inclusive of, not exclusive of, the gift in clause 5 of the Will.
The submissions filed on behalf of the trustee referred to the relevant legislation and authorities concerning the construction of wills, and the admissibility of extrinsic evidence to resolve any ambiguity in the construction of wills.
The trustee referred to the decision of Rein J of the New South Wales Supreme Court in Garbett v Bear,[3] where her Honour was faced with a not dissimilar problem to the present case: that is, the relevant will contemplated a gift which could only be effected by a subdivision of a property. Her Honour concluded as follows:
I have no doubt that the clause 8 and 9 gifts were intended to be the principal gifts and were intended to take precedence over the block gifts. Further, since it is not possible to sell the Property without two small parcels of land since that would effectively create a subdivision where none is permitted, I am of the view that the attempted graft of a trust fails because of impossibility. The other problem is that the reason for the testator wishing to make the gift (even if subdivision were possible) is one that is unachievable because he seeks to impose as a condition of the block gifts that Ornella will not sell or rent and will keep them in the condition in which they are in ‘forever’. I do not accept the contention that the word ‘forever’ should be ignored or read down.[4]
[3][2015] NSWSC 1524.
[4]Ibid [40].
The trustee contended that the dilemma caused by the inability of the executor to sub‑divide the Baxter property should be resolved in the manner advised by Mr Boaden: that is, the Baxter property should be sold, and a share in the net proceeds of sale representing the value of his notional five acre parcel be distributed to the trustee. The trustee’s submissions contrasted the current case with the difficulty faced by Rein J in Garbett v Bear,[5] where the testator had made it very clear that the relevant property could not be sold. Here, no such intention was expressed by the deceased: rather, the gift simply cannot be effected by a transfer in specie. The trustee submitted that the deceased’s intentions can be given effect by the sale of the Baxter property and a division of the proceeds in a manner which takes into account Dennis’ rights under clause 5 of the Will.
[5][2015] NSWSC 1524.
The trustee’s submissions acknowledge that the relevant context provides some support for the proposition that the language of clause 6 of the Will was not intended to add a one‑third share of the proceeds of sale of the balance of the Baxter property to the gift of five acres in clause 5 of the Will.
As noted in the submissions filed on behalf of the executor, the principles applicable to the construction of wills are conveniently summarised in the decision of McMillan J in Re Melbourne; Wall v Wathen[6] (‘Re Melbourne’), as follows (omitting footnotes):
[6][2016] VSC 514.
The will falls to be construed in accordance with the principles of construction of wills, with the written words in the will being given their ordinary meaning and the determination of the issues being made by reference to the words used by the testatrix in her will, having regard to any established rules of construction, as well as any statutory provisions that may apply.
At common law, the task of a court of construction is to give effect to the intentions of the testator by examination of the words used in the will, having regard to the will construed as a whole, aided as is necessary by any admissible extrinsic evidence.
The ten principles relating to the construction of wills are set out by Isaacs J in Fell v Fell, principles that his Honour described as ‘incontestable’. Prima facie, the written words in the will must be given their ordinary meaning, with the court making a determination of the issue by reference to the words used by the testator in the will, having regard to any established rules of construction and construing a will ‘as trained legal minds would do’. As articulated in the second principle in Fell v Fell, his Honour stated:
The instrument ... must receive a construction according to the plain meaning of the words and sentences therein contained. But ... you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it.
If, in the context of the will read as a whole and the surrounding circumstances, the ordinary meaning of the words in the will does not make sense, extrinsic evidence is admissible in a court of construction under the ‘armchair principle’. This principle allows the court to place itself in the position of the testator at the time of executing the will and take into account all of the circumstances actually known to the testator when the will was made.
This approach was succinctly stated by Fullagar J in ANZ Executors & Trustee Co Ltd v McNab:
The search for testamentary intention must be a search for intention disclosed by the words used, and in this search words must prima facie be given their ordinary meanings and, if the law has consistently given a particular meaning to some word or phrase, that is the meaning which the word or phrase must prima facie be given. Nevertheless, the intention is to be gathered from a study of the will as a whole, and in the light of any relevant and admissible evidence of surrounding circumstances.[7]
[7]Ibid [18]-[22].
In Re Melbourne, McMillan J referred to the decision of Isaacs J in Fell v Fell,[8] where, in an oft‑cited passage, his Honour set out the key principles governing the construction of will, which remain in force and continue to be regularly applied today. These principles are conveniently summarised in the following extract from Interpretation and Use of Legal Sources (citations omitted):[9]
[8](1922) 31 CLR 268.
[9]Herzfeld P, Prince T, and Tully S, Interpretation and Use & Legal Sources (Thomson Reuters, 2013).
(1)The court must determine the meaning of the will from the text itself aided only by such extrinsic evidence as is admissible.
(2) The will must be construed as a whole.
(3)In construing the will as a whole the court aims to determine the basic scheme of the testator’s disposition and seeks, where possible, to give effect to that scheme.
(4)Construing the will as a whole allows the court to correct obvious mistakes where it is clear what correction should be made. More generally, the court may ‘mould the language’ of the will, by supplying, correcting, transposing or omitting words, phrases or even whole clauses, where that is required to give effect to a necessary implication of the testator’s intention drawn from the will as a whole against the background of admissible extrinsic evidence.
(5)The court, however, must not merely speculate on the testator’s intention. The court cannot rewrite the testator’s will to give effect to an intention that the court supposes the testator had but which is not expressed or plainly implied in the language of the will read as a whole. As Jenkins LJ stated in Re Bailey:
[I]t is not the function of a court of construction to improve upon or perfect testamentary dispositions. The function of the court is to give effect to the dispositions actually made as appearing expressly or by necessary implication from the language of the will applied to the surrounding circumstances of the case.
(6)Prima facie the words of a will are given their ordinary and natural meaning, unless the context provided by the will as a whole or admissible extrinsic evidence suggests otherwise. Usage is determined as at the time the will was made. … The governing consideration is that the language should be read in the sense which it appears, from the will and admissible extrinsic evidence, that the testator attached to the expressions used, unless there is some rule of law to the contrary.
(7)Relevant linguistic maxims of construction … and principles to resolve ambiguity … will be applied.[10]
[10]Ibid [25.3.950]
There are a number of maxims and principles applicable specifically to the task of constructing wills, including, among others, the presumption of intestacy, and the presumption that the Court should work to preserve a gift. Further, s 36 of the Act provides as follows:
When is evidence admissible to clarify a will?
(1)In any proceedings to construe a will, if the language used in a will renders the will or any part of the will—
(a) meaningless; or
(b) uncertain or ambiguous on the face of the will; or
(c)uncertain or ambiguous in the light of surrounding circumstances—
evidence may be admitted to assist in the interpretation of that language.
(2)Evidence which may be admitted under subsection (1)(c) does not include evidence of the testator's intention.
(3)Nothing in this section prevents the admission of evidence which would otherwise be admissible at law in any proceedings to construe a will.
In my view, it is not necessary to revert to extrinsic evidence of the testator’s intention (which in any event is not permissible by reason of the terms of s 36 of the Act) in order to identify the dwelling which was the subject of the gift under the Will. Section 34(1) of the Act provides that:
A will takes effect, with respect to the property disposed of by the will, as if it has been executed immediately before the death of the testator.
Accordingly, where there is an identification of property, or a category of property (e.g. ‘chattels’, or ‘shares’) in a will, the property falling within the relevant category is taken to be the property owned by the testator as of the date of death, not as at the date the will was made. In the current case, I consider that this section authorises the executor (and this Court) to construe the phrase ‘… five acres on which his residence is erected on the [Baxter property]’ as being Dennis’ residence as at the date of the deceased’s death.
However, I agree with the submissions of the executor that the gift fails, and as such, the whole of the Baxter property falls into residue, to be distributed in accordance with the terms of the Will. In particular, the deceased did not have the capacity to give title to the land said to constitute the gift, and no means of obtaining such a title. Further, it is not possible to identify with any degree of precision the five acre parcel to be transferred to Dennis.
The submissions of the trustee relied upon Mr Boaden’s advice in support of his contention that the Baxter property be sold, and Dennis (really, the trustee) be provided with that part of the proceeds of sale which represents the five acre parcel gifted to him in the Will, noting that the value of that parcel would be enhanced by its improvements, namely, the new house. For reasons which are not entirely clear, that the gift cannot be transferred in specie, and that the precise boundaries of the five acre parcel are not identified in the Will, are not seen as barriers to giving effect to the gift in the Will.
With respect, I disagree. Rather, the gift fails for uncertainty, and, should I be wrong about that, the doctrine of ademption applies. First, I cannot see how the five acre parcel can be identified save in the unlikely event the deceased intended to carve out a spherical five acre parcel with the new house at its centre. There are no apparent physical features of the property which would suggest an obvious manner of subdivision. While the Court should strive to give effect to a testator’s intention, it is trite law that the Court cannot rewrite a will. As stated by Master Newnes in Bakranich v Robinson:[11]
Where, however, the testator was not merely misdescribing an existing subject but was under the erroneous impression that the subject actually existed as described, or that he could dispose of it, the devise is likely to fail. It is not sufficient that the Court is satisfied as to what the testator would have wished to happen to his property had he correctly understood the position. The Court must be satisfied that the words that have been used, construed in the light of the extrinsic evidence, achieve that result; the Court cannot make a Will for the testator on the basis of evidence as to what he would have done had he had in mind the true position when he made his Will: … . So where the difference between what the testator described and what the testator possessed is a qualitative difference which makes the testator's expressed wishes and directions incapable of fulfilment, the result is that the disposition must fail … .[12]
[11][2005] WASC 12.
[12]Ibid [16].
Here, I have found that the subject matter of the gift is not capable of precise identification. However, even if it were capable of identification, the principle of ademption applies, as title to any five acre parcel cannot be transferred to Dennis.
In Re Blake,[13] J Forrest J summarised the doctrine of ademption as follows:
[13][2009] VSC 184.
Ademption must be of a specific, not a general gift. It occurs where the subject matter of the gift no longer exists at the date of death. Ademption does not occur where the subject matter of the gift has changed in name or form only, yet is substantially the same thing.
In Brown v Heffer, the principle of ademption was explained by the High Court as follows:
Ademption of a specific gift by will occurs where the property the subject of the gift is at the testator’s death no longer his to dispose of .... An obvious case of ademption is that in which the testator has completely divested himself of the property in his lifetime so that at his death there is in his estate nothing which even substantially ... answers the words of gift.
To determine whether the principle of ademption has application to the gift, two questions must be answered by the Court. First, what is it that has been bequeathed by the specific gift and, secondly, having identified the nature of the gift, does the subject matter of the bequest exist as at the death of the testator.[14]
[14]Ibid [43]-[45].
The doctrine of ademption generally comes in for consideration when an asset which existed at the time the testator made a will ceases to exist, or has been disposed of, by the date of death of the testator. Here, the five acre parcel of land (even if capable of precise identification) never existed in a transferrable form. However, in my view, the principle of ademption applies in that the deceased, at the time of her death, had no asset which answers to the description of the gift in the Will. The position is no different than had the deceased effected a subdivision, but instead of retaining the five acre parcel, sold it to a third party prior to her death.
Contrary to the submissions advanced on behalf of the trustee, I see no material distinction between the circumstances facing the Court in the current case and those considered in Garbett v Bear.[15] From my reading of this decision, the critical issue was that the land sought to be disposed of in specific parcels was, as is the case here, incapable of being subdivided, not that the testator had directed that the property not be sold. In the words of her Honour, the gift ‘fails because of impossibility’.[16]
[15][2015] NSWSC 1524.
[16]Ibid [40].
Following on from the above, I accept that the outcome of the application does not give effect to the deceased’s intention that Dennis be entitled to have transferred to him the land upon which the new house is located. Given that the deceased paid for the construction of the new house, one inference which can be drawn is that the deceased intended to confer upon Dennis the benefit of a new house of his own, such that, should the gift fail for whatever reason, he should be entitled to the enhanced value of part of the Baxter property. However, there may be a range of reasons why the deceased paid for the construction of the new house. For example, she may have done so to enhance the quality of her life, by creating an incentive for Dennis to continue to live on the Baxter property during her senior years. She may have wished to live on her own in the old house. Given my preferred construction of clause 6 of the Will, as discussed below, I do not consider that it must be inferred that the deceased intended to confer a financial benefit upon Dennis greater than that conferred upon her other children, such that it is incumbent upon the Court to rewrite the Will to enable the gift to be made by way of money, rather than in specie.
Finally, in relation to the question of whether Dennis’ one‑third share of the residue (now including the whole of the Baxter property) is inclusive or exclusive of the estimated value of the notional five acre property, I agree with the submissions advanced on behalf of the executor that the gift in clause 6 of the Will is inclusive of the value of any five acre parcel of land. The word ‘including’ should be given its natural and ordinary meaning. In my view, it is tolerably clear that the value of the gift of the notional five acre parcel of land is to be brought into account against Dennis’ one‑third share of the proceeds of sale of the Baxter property. Given my findings that the gift in clause 5 of the Will fails, the practical effect of this finding is that the executor, Dennis, and Nigel each take one‑third of the proceeds of sale of the Baxter property.
Accordingly, the questions in the originating motion should be answered as follows:
Question 1
Yes
Question 2
The gift in Clause 5 to Dennis fails as it did not form part of the deceased’s estate at her death.
Question 3
The gift of 5 acres and the residence falls into the deceased’s residuary estate.
Question 4
The residuary estate includes the 5 acres of land and the residence thereon.
Question 5
Dennis is entitled to one third of the residuary estate which includes the 5 acres of land and the residence thereon.
Question 6
Unnecessary to answer
Question 7
The parties’ costs of and incidental to this application be retained or paid out of the estate on an indemnity basis.
Finally, given that the need for this application arises out of the fact that the deceased’s intentions cannot be given effect, it is appropriate that the parties’ costs of the application be borne by the estate on an indemnity basis.
---
0
4
0