Engelina Maria Sellin as executrix of the estate of Milan Glavota v Galic - [2022] WASC 249

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   ENGELINA MARIA SELLIN as executrix of the estate of MILAN GLAVOTA -v- GALIC [2022] WASC 249
CORAM:   CURTHOYS J
HEARD:   4 JUNE 2021
DELIVERED          :   5 AUGUST 2022
FILE NO/S:   CIV 2035 of 2017
BETWEEN:   ENGELINA MARIA SELLIN as executrix of the estate of MILAN GLAVOTA
Plaintiff
AND
TIHOMIR GALIC
First Defendant
IVA ALERIC
Second Defendant
ADAM ALERIC
Fourth Defendant
VLADIMIR GLAVOTA
Sixth Defendant
SLAVO GLAVOTA
Seventh Defendant
DANKO GLAVOTA
Eighth Defendant
DANICA GLAVOTA
Ninth Defendant
MARKO ALERIC
Tenth Defendant
LUKA ALERIC
Eleventh Defendant
VERICA ALERIC
Twelfth Defendant
RUZA ALERIC
Thirteenth Defendant
ENGELINA MARIA SELLIN
Fourteenth Defendant

Catchwords:

Wills - Construction - Whether property devised beneficially and absolutely or on trust - Whether clause is void for repugnancy or inconsistency - Whether clause is void for uncertainty

Legislation:

Nil

Result:

Questions answered on preliminary issues

Category: B

Representation:

Counsel:

Plaintiff	:	G D Cobby SC & M Georgiou
First Defendant	:	M D Cuerden SC
Second Defendant	:	P Cahill SC & M Curwood SC
Fourth Defendant	:	P Cahill SC & M Curwood SC
Sixth Defendant	:	P Cahill SC & M Curwood SC
Seventh Defendant	:	P Cahill SC & M Curwood SC
Eighth Defendant	:	P Cahill SC & M Curwood SC
Ninth Defendant	:	P Cahill SC & M Curwood SC
Tenth Defendant	:	P Cahill SC & M Curwood SC
Eleventh Defendant	:	P Cahill SC & M Curwood SC
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	P Cahill SC & M Curwood SC
Fourteenth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Jackson McDonald
First Defendant	:	Popperwell & Co
Second Defendant	:	Frichot Lawyers
Fourth Defendant	:	Frichot Lawyers
Sixth Defendant	:	Frichot Lawyers
Seventh Defendant	:	Frichot Lawyers
Eighth Defendant	:	Frichot Lawyers
Ninth Defendant	:	Frichot Lawyers
Tenth Defendant	:	Frichot Lawyers
Eleventh Defendant	:	Frichot Lawyers
Twelfth Defendant	:	In person
Thirteenth Defendant	:	Frichot Lawyers
Fourteenth Defendant	:	Greenstone Legal

Cases referred to in decision:

Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404
Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253
Dean v Cole (1921) 30 CLR 1
Fell v Fell [1922] HCA 55; (1922) 31 CLR 268
Kauter v Hilton (1953) 90 CLR 86
Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62
Perpetual Trustees Executors and Agency Company of Tasmania Ltd v Walker [1953] HCA 21; (1953) 90 CLR 270
Perrin v Morgan [1943] AC 399
Re Allen (deceased); Faith v Allen [1953] Ch 810
Re Armstrong (deceased) [1960] VR 202
Re Cuming; Nicholls v Public Trustee (SA) [1945] HCA 32; (1945) 72 CLR 86
Re Gardiner; Gardiner v Gardiner [1971] NSWLR 494
Ritchie v Magree [1964] HCA 10; (1964) 114 CLR 173
Smidmore v Smidmore [1905] HCA 58; (1905) 3 CLR 344
Walsh v Sloan as Executor of estate of Keddie [2019] WASCA 107

CURTHOYS J:

Introduction

This matter concerns the determination of preliminary issues as to the proper construction of a gift of a property at 51 Orange Avenue, Upper Swan (the Property) in the will of the late Lucija Glavota dated 30 June 2006 (the Will) and the entitlement of various beneficiaries named in the Will to their interests in the Property.
The issues come before this court in the context of a negligence action commenced by the plaintiff, Engelina Sellin, against the first defendant, Tihomir Galic. Engelina alleges that Galic, a legal practitioner, failed to properly advise Milan Glavota, the executor appointed under the Will, as to its proper construction and the steps Milan should take to ensure that he obtained the gift of the Property under the Will.
Accordingly, this court is not sitting as a court of probate construing the Will. However, for the purposes of this decision, it makes no relevant difference.
The second, fourth, sixth, seventh, eighth, ninth, tenth, eleventh and thirteenth defendants are, or claim through, the beneficiaries nominated in cl 2(ii) of the Will (the Beneficiary Defendants). The Beneficiary Defendants are as follows:
(a)Iva Aleric is the second defendant;
(b)Danijel Aleric is deceased; and
(i)his son, Marko Aleric, is the tenth defendant;
(ii)his son, Luka Aleric, is the eleventh defendant;
(iii)his wife, Verica Aleric, is the twelfth defendant;
(c)Andelko Aleric is deceased and his wife, Ruza Aleric, is the thirteenth defendant;
(d)Adam Aleric is the fourth defendant;
(e)Vladimir Glavota is the sixth defendant;
(f)Slavo Glavota is the seventh defendant;
(g)Danko Glavota is the eighth defendant; and
(h)Danica Glavota is the ninth defendant.
The contest at the trial of preliminary issues was between Engelina and the Beneficiary Defendants on the one hand and Galic on the other.[1] Essentially, Engelina and the Beneficiary Defendants submit that the gift of the Property was conditional. Galic submits that the gift was absolute.
[1] ts 12 - 13 (4/6/2021).

Background

Lucija died testate on 20 July 2006. By cl 1 of the Will, Lucija appointed her nephew, Milan, to be her executor and trustee. The principal asset of Lucija's estate was the Property.
Milan died testate on 17 February 2013. His will, dated 4 May 2009, appointed his partner, Engelina, as his executor and trustee and left the whole of his estate to her absolutely. There was a gift over in the event that Engelina predeceased or died with Milan but as she survived Milan that gift did not take effect. Thus, Engelina is the sole beneficiary of Milan's estate.
Engelina is therefore the executrix of Milan's estate and, by chain of representation, the executrix of Lucija's estate.
Milan did not within five years of Lucija's death:
(a) sell the Property; or
(b) make any payments to any of the beneficiaries named in the Will.
The value of the Property for probate purposes was deposed to by Milan to be $950,000.[2]
[2] Affidavit of Ante Zorotovic sworn 6 May 2021, 4 - 10.
Engelina transferred the Property to Satterley Brookside Pty Ltd by a transfer of land dated 21 December 2015. The stated consideration was $7,416,876.02.[3]
[3] Affidavit of Ante Zorotovic sworn 6 May 2021, 11 - 14.

The relevant terms of the Will

The Will relevantly provided:
2SUBJECT to the prior payments from my estate of all my funeral & testamentary expenses and just debts I DEVISE AND BEQUEATH the whole of my estate whether real or personal of whatsoever description and wheresoever situated from time to time to according to [sic] the following manner -
My residence
(i)I GIVE all my house & land (including the old house sitting on my property) to my said nephew MILAN GLAVOTA absolutely.
(ii)This gift of my said house & land to my nephew is on the condition that he shall pay out the following amounts to the correspondingly named persons -
I GIVE TWELVE & ONE HALF PER CENT (12.5%) … of the value of my house & land to IVA ALERIC (Wife to my late brother MARKO ALERIC).
I GIVE TWELVE & ONE HALF PER CENT (12.5%) … of the value of my house & land to my brother DANIJEL ALEREIC [sic].
I GIVE TWELVE & ONE HALF PER CENT (12.5%) … of the value of my house & land to my brother ADAM ALEREIC [sic].
I GIVE TWELVE & ONE HALF PER CENT (12.5%) … of the value of my house & land to my brother ANDELKO ALEREIC [sic].
I GIVE TEN PER CENT (10%) … of the value of my house & land to my late Husband's nephew VLADIMIR GLAVOTA.
I GIVE TEN PER CENT (10%) … of the value of my house & land to my late Husband's nephew SLAVO GLAVOTA.
I GIVE TEN PER CENT (10%) … of the value of my house & land to my late Husband's nephew DANCO [sic] GLAVOTA.
I GIVE TEN PER CENT (10%) … of the value of my house & land to my late Husband's niece DANICA GLAVOTA.
…
Balance of estate
(iv)I GIVE the balance of my estate such as the contents of my house and shed and any machinery and livestock I have to my said nephew MILAN GLAVOTA absolutely.
3I DIRECT that my nephew MILAN shall be given five years following my death within which to make such payments referred to above (or within any other time as is mutually agreed to in writing). Should any of these 9 beneficiaries happen to die before the 5‑year period has expired, then I GIVE that amount with [sic] that person would have received to such of any children of theirs all JOINTLY & EQUALLY.
4Regarding ascertaining the value of my property as at the date of my death, I DIRECT that my Executor & Trustee shall obtain a sworn valuation over the property and I hereby declare that the valuation amount arrived at shall be the value of my residence for the purposes hereof.
5Regarding this 5‑year period, I have allowed this as MILAN wishes to subdivide the land and sell the blocks but wishes to keep the old house to live in and some land around it.
6After the 5‑year period, should MILAN not have made such payments, then in the absence of any agreement between any of the nine beneficiaries referred to above, the property is then to be placed on the market immediately and I DIVIDE all net proceeds from the sale of my property in the manner set out in Paragraph 2. Of the remaining TEN PER CENT (10%), I GIVE this [sic] MILAN.
7At all times my estate is to be responsible for all shire and water rates over the property with the exception of water, gas, electricity and telephone charges which shall be the responsibility of MILAN.
8I DIRECT that the costs associated with the administration of my estate shall be paid out of the monies which MILAN is require[d] to make under this Will before they are distributed.

The pleadings

Sellin pleads in par 8 of her second further amended statement of claim filed on 10 September 2020 (the statement of claim) that on the proper construction of the Will, it provided in effect that:
(a)the [Property] was devised to Milan;
(b)Milan was obliged to make payments within 5 years of the death of Lucija Glavota equivalent to 12½% of the value of the Property as at the date of her death to each of the second and fourth defendants and Danijel Aleric (alternatively, upon his death, the tenth and eleventh defendants) and Andelko Aleric, and 10% of the value of the Property as at that date to each of the sixth to ninth defendants;
(c)if Milan failed to make those payments within that time, in the absence of agreement to the contrary the Property was to be sold, with Milan to receive 10% of the net proceeds of the sale and the balance distributed amongst the persons pleaded in paragraph (b) in the proportions there pleaded;
(d)all shire and water rates in respect of the Property for the period of 5 years from the date of Lucija Glavota's death were to be paid from her estate.
As to the above pleadings, Galic pleads in par 4 of his re‑amended defence filed on 23 June 2020 (Galic's defence) that he:
(a)admits sub-paragraph (a) thereof;
(b)save to not admit that upon the death of Danijel Aleric his entitlement under the Will was bestowed upon the tenth and eleventh defendants, the first defendant admits sub‑paragraph (b) thereof;
(c)says that on the proper construction of the Will the Property was devised to Milan beneficially and absolutely, subject only to the existence of personal obligations on Milan to make payment of the amounts referred to in clause 2(ii) of the Will and the existence of any charge over the Property to secure compliance with the obligation to make those payments but not otherwise;
(d)says that clause 6 of the Will, according to its terms, provided that after the 5 year period referred to in sub-paragraph 8(b) of the statement of claim, should Milan not have made the payments referred to in sub-paragraph 8(b) of the statement of claim, then in the absence of any agreement between any of the nine named beneficiaries referred to therein (including Milan), the Property was then to be placed on the market immediately and the executrix purported to divide all net proceeds from the sale of the Property in the manner set out in clause 2 of the Will, and of the remaining 10% she purported to give this to Milan;
(e)says that clause 6 of the Will is repugnant to or inconsistent with the absolute devise of the Property to Milan as pleaded in sub‑paragraph (c) herein, and is and was at all material times invalid and void and of no effect;
(f)further and alternatively says that clause 6 of the Will is too uncertain to be given effect, and is therefore invalid and void and of no effect on that further ground;
(g)says that clause 7 of the Will, according to [its] terms, provided that at all times the Estate was to be responsible for all shire and water rates over the Property with the exception of water, gas, electricity and telephone charges which shall be the responsibility of Milan; and
(h)otherwise denies each and every allegation therein.
The Beneficiary Defendants in par 2 of their defence filed on 14 May 2020 (Beneficiary Defendants' defence) deny par 8 of the statement of claim. They relevantly plead in par 3 that, on a proper construction of the Will, the Property was devised to Milan on trust for the beneficiaries nominated in cl 2(ii) of the Will:
(a)unless and until Milan made payments to those beneficiaries in accordance with cl 2(ii) of the Will within five years of the date of Lucija's death; and
(b)so that, in the event that Milan did not make the payments to those beneficiaries in accordance with cl 2(ii) of the Will within five years of the date of Lucija's death, the Property was to be sold and the proceeds of the sale shared between those beneficiaries and Milan as provided for in cl 6 of the Will.

The preliminary issues

On 9 October 2020, the court made orders for the trial of preliminary issues in this action by way of four questions.
The four questions were as follows:
1.On the proper construction of the Will, was the Property devised:
(a)to Milan beneficially and absolutely as pleaded in paragraph 4(c) of the re-amended Defence of the first defendant; or
(b)on trust for Milan and the beneficiaries nominated in clause 2(ii) of the Will with the gift of the Property to Milan only becoming absolute upon the satisfaction of the conditions specified in clause 2(ii) of the Will within the time specified in clause 3 of the Will as pleaded in paragraph 3 of the Defence of the second, fourth, sixth, seventh, eighth, ninth, tenth, eleventh and thirteenth defendants?
2.If the Property was devised to Milan beneficially and absolutely, is clause 6 of the Will void and of no effect because it is repugnant to, or inconsistent with, the devise of the Property to Milan beneficially and absolutely?
3.Further or alternatively to Questions 1 and 2, is clause 6 of the Will void and of no effect because it is too uncertain to be given effect?
4.Alternatively to Questions 2 and 3, on the proper construction of the Will if clause 6 of the Will is valid and the Property is sold pursuant to that clause, are the beneficiaries nominated in clause 2(ii) of the Will entitled to a share of:
(a)the net proceeds of the sale of the Property; or
(b)the value of the Property as at 20 July 2011 or as at such date thereafter which was sufficient to allow the Property to have been sold?
An answer to question 4 was not sought at the trial.[4]
[4] ts 10 (4/6/2021).

Principles of construction

The object of construing a will is to ascertain the testator's intention as expressed in the will, rather than the testator's actual or assumed subjective intention. As Viscount Simon LC said in Perrin v Morgan:[5]
The fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case - what are the 'expressed intentions' of the testator.
[5] Perrin v Morgan [1943] AC 399, 406.
A will is to be construed as a whole having regard to the ordinary meaning of the words or phrases used.[6] The overriding consideration is the language used in the will itself.[7] The language of the will must be read in the sense that the testator appears to have attached to the expressions used.[8]
[6] Fell v Fell [1922] HCA 55; (1922) 31 CLR 268, 274 ‑ 275 (Isaacs J).
[7] Parnell v Hinkley [2007] WASC 102 [12].
[8] Ritchie v Magree [1964] HCA 10; (1964) 114 CLR 173, 181 (Kitto J); Walsh v Sloan as executor of the estate of Keddie [2019] WASCA 107 [33].
Where there is inaccuracy or inconsistency in the will the court must, where possible, ascertain the meaning of the will, taken as a whole, in order to give effect to the testator's intentions.[9] A court must make every effort to construe the will so as to harmonise conflicting clauses and render every part of the will effective.[10]
[9] Fell v Fell (274 - 275) (Isaacs J); Nicol v Chant [1909] HCA 4; (1909) 7 CLR 569, 577 (Griffith CJ); Smidmore v Smidmore [1905] HCA 58; (1905) 3 CLR 344, 354.
[10] Peter v Shipway [1908] HCA 52; (1908) 7 CLR 232, 257 (Isaacs J).
If two plainly inconsistent intentions are discovered, one must give way to the other. Where a provision contains words which are apparently inconsistent with provisions clearly expressed elsewhere in the will, the court may discard those words or if possible, modify them in such a way as to carry out the intention of the testator as revealed by the whole of the will.[11] Where a court is able to ascertain from the will the main purpose and intention of the testator, then if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified.[12]
[11] Smidmore v Smidmore (354 - 355).
[12] Brennan v Permanent Trustee Co of NSW Ltd [1945] HCA 17; (1945) 73 CLR 404, 414 (Dixon J).
A gift is either absolute or not depending on the intention of the testator. Where the word 'absolutely' is used, a testator must be treated as having used that word in a meaning that will bear consistently with the rest of the will. Reference to a gift devised 'absolutely' is indicative, albeit not determinative, of an intention to make the gift beneficial and not on trust.[13] However, use of the word does not necessarily operate to make a gift in fee simple. The testator's intention must be gathered from the language of the whole will and not by privileging words or phrases in isolation.
[13] Dean v Cole [1921] HCA 46; (1921) 30 CLR 1, 8 (Knox CJ, Gavan, Duffy & Rich JJ), 9 - 10, 12, 14 (Higgins J).
An absolute gift may be cut down by subsequent words that manifest a reasonably clear or certain intention to do cut down that gift,[14] for example, by attaching a condition or creating a trust.
[14] Peter v Shipway (241 (Griffith CJ), 247 (O'Connor J), 257 (Isaacs J)).
It is open to a testator to attach a condition to a gift. Conditional gifts can be subject either to a condition precedent or a condition subsequent. The approach to be adopted in determining the nature of a conditional gift was set out by Latham CJ in Re Cuming; Nicholls v Public Trustee (SA):[15]
In order to ascertain whether a condition is precedent, so that it must be performed before a beneficiary takes any interest, or a condition subsequent, so that it operates only in defeasance of an interest given to the beneficiary, it is necessary to look at the precise words of the provision creating the condition. It is a question of the intention of the testator, to be ascertained from the words which he has used.
[15] Re Cuming; Nicholls v Public Trustee (SA) [1945] HCA 32; (1945) 72 CLR 86, 91.

Where a condition provides for certain events to occur within a specified time, it is for the court to determine whether upon a true construction of the will it was the testator's intention that the temporal parts form part of the condition or whether the condition is solely related to some performance regardless of time. If it is the latter, the temporal aspect of the condition may be read as being non-essential.[16]
[16] Re Gardiner (deceased); Gardiner v Gardiner [1971] 2 NSWLR 494, 498.
A condition is void if it is repugnant to or inconsistent with other provisions or gifts contained in the will.
A condition may also be void for uncertainty, including uncertainty of expression in the creation of the limitation and uncertainty in its operation. The test for uncertainty differs between conditions precedent and conditions subsequent. In the case of a condition precedent, it will be valid if the donee can establish that they can satisfy the condition.[17] The test that applies to a condition subsequent is stricter in that the condition 'must be such that the court can see from the beginning, precisely and distinctly, upon the happening of what event it was that the preceding vested estate was to determine'.[18]
[17] Re Allen (deceased); Faith v Allen [1953] Ch 810, 817 (Evershed MR).
[18] Perpetual Trustees Executors and Agency Company of Tasmania Ltd v Walker [1953] HCA 21; (1953) 90 CLR 270, 278 (Dixon CJ).
Where the terms of a will are said to create a trust, the intention to do so must be clearly manifested to be effective. It must be clear what property is subject to the trust and reasonably certain who the beneficiaries are.[19] The intention to create a trust is to be objectively ascertained from the words used, not a subjective intention which may have existed but which cannot be extracted from those words.[20] The onus of proving the intention is on the party asserting that a trust was created.[21]
[19] Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62 [204] (Keane J); Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86, 97 (Dixon CJ, Williams & Fullagar JJ).
[20] Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 [114] (Heydon & Crennan JJ).
[21] Re Armstrong (deceased) [1960] VR 202.

The proper construction of the Will

Question 1

The first question I must determine is whether, on the proper construction of the Will, the Property was devised:
(a) to Milan beneficially and absolutely as pleaded in par 4(c) of Galic's defence; or
(b) on trust for Milan and the beneficiaries nominated in cl 2(ii) of the Will with the gift of the Property to Milan only becoming absolute upon the satisfaction of the conditions specified in cl 2(ii) of the Will within the time specified in cl 3 of the Will as pleaded in par 3 of the Beneficiary Defendants' defence.

The submissions

Engelina submitted that Lucija's intention, as manifested in the Will, was for the Property to be devised on trust for Milan and the beneficiaries and that the provisions of the Will are inconsistent with an intention that the complete beneficial interest in the Property pass to Milan. She submitted that although cl 2(i) of the Will expresses a gift of the Property to Milan absolutely, it is immediately followed by cl 2(ii) which provides that 'this gift is on the condition that' Milan shall make certain payments to eight specified beneficiaries.[22]
[22] Plaintiff's submissions for trial of preliminary questions filed 7 May 2021 [25] (Plaintiff's Submissions).
Engelina asserted that Lucija's intention was to give the Property to Milan to be held by him upon trust as follows:
(a)Milan might take the whole of the beneficial interest in the Property if he first paid the other beneficiaries their respective proportions of the value of the Property determined in accordance with cl 4;
(b)Milan might sell the whole or part of the Property within five years of Lucija's death but he would be liable to account for the proceeds as trustee unless and until he made the payments contemplated by cl 2(ii); and
(c)if no payments were made within the five‑year period, the Property would then be sold and the net proceeds dealt with in accordance with cl 6.[23]
[23] Plaintiff's Submissions [37].
Engelina identified several features that she contends evidence Lucija's intention that the Property be held by Milan on trust until payments were made:
(1)Clause 6 requires the Property to be sold and all net proceeds to be divided in the manner set out in cl 2(ii) and cl 6, in the event that Milan has not made the requisite payments within the specified five years, there being no agreement otherwise between the nine specified beneficiaries. The Property could not be available for sale and the proceeds divided in accordance with cl 6 if the entire beneficial interest in the Property passed to Milan upon Lucija's death.
(2)The eight payments specified in cl 2(ii) are expressed as gifts by Lucija. Clause 3, in dealing with the position where one or more of those eight beneficiaries or the ninth, Milan, dies before the five‑year period has expired, expresses Lucija's intention to give the amount that person would have received to their children. Clause 3 only applies during the five‑year period. That provision assumes that, in the event that one of the nine beneficiaries dies before the five‑year period has expired without payment having been made, a bequest is to be made by the deceased, not a payment by Milan in fulfilment of a condition.
(3)Clause 7 provides for the estate's ongoing interest in the Property, as the estate is responsible for shire and water rates. It also, consistently with cl 5, expresses an intention to allow Milan to continue to live on the Property by requiring him to pay water, gas electricity and telephone charges for the Property. Clause 5 contemplates that Milan may subdivide the Property and sell it. Milan would not have been, however, free to deal with the proceeds of sale of subdivided lots prior to making all the cl 2(ii) payments. Until all those payments were made, Milan held the Property, and would have held the proceeds of sale of some or all of it, upon trust for the other beneficiaries and himself. As such, Milan bore the risk that he would be required to account to the other beneficiaries if he applied the proceeds of sale of lots created by the subdivision of the Property prior to making the payments contemplated by cl 2(ii) of the Will. The Will therefore allowed him the opportunity, but not the obligation, to subdivide and sell the Property, but not at the expense of the interests of the other beneficiaries.
(4)In contrast to cl 2(i), cl 2(ii) and cl 6, cl 2(iii) provides that the balance of the estate is gifted to Milan absolutely with no limitation on the gift.
(5)A distinction is drawn in cl 2, cl 5 and cl 6, all of which refer to Milan in his personal capacity, and cl 4, in which reference is made to him as executor and trustee, such that the intention expressed in the Will is that Milan is to hold the Property as trustee in his capacity as a beneficiary, rather than as executor.[24]
[24] Plaintiff's Submissions [28] - [36].
The Beneficiary Defendants effectively adopted the same position as Engelina. They contend that on the proper construction of the Will the Property was held on trust by Milan as executor for the benefit of the beneficiaries in cl 2(ii) (or their successors) and Milan in his beneficial capacity. The trust would cease when:
(a)the payments under cl 2(ii) were made within the five‑year period specified in cl 3 whereupon a gift of the Property to Milan would become absolute; or
(b)the Property was sold and the net proceeds of sale were divided under cl 6.[25]
[25] Second, fourth, sixth, seventh, eighth, ninth, tenth, eleventh and thirteenth defendants' responsive submissions for trial of preliminary questions filed 21 May 2021 [2].
Accordingly, the Beneficiary Defendants submitted, Milan's absolute interest was subject to two conditions precedent. First, that there be a payment to the Beneficiary Defendants in accordance with cl 2(ii). Second, that the payment occur within a period of five years from the date of death. Only when these conditions were satisfied would the gift become absolute.[26]
[26] ts 13 (4/6/2021).
In support of the above construction, the Beneficiary Defendants submitted that the gift of the Property to Milan 'absolutely' by cl 2(i) is to be construed in the context of the Will as a whole, specifically, cl 2(ii), cl 3, cl 4, cl 5, cl 6 and cl 7:[27]
Clause 2(ii) provides that the gift of the Property to Milan is 'on the condition that' he pay a total of 90% of the value of the Property to the persons nominated in that clause, in varying amounts.
Clause 3 provides that Milan has a period of five years from the date of the Deceased's death in which to make the payments referred to in clause 2(ii).
Clause 4 requires a sworn valuation to be obtained as to the value of the Property at the date of the Deceased's death. The apparent purpose of this clause is to enable the amounts to be paid by Milan pursuant to clause 2(ii) to be ascertained.
Clause 6 is clear, consistently with clause 3, as to the testamentary intention of the Deceased that the gift of the Property to Milan was not to take effect if the payments contemplated by clause 2(ii) were not made within five years of the Deceased's death. The underlying premise of clause 6 is that the Property would remain available to be sold by the estate after that time and the net proceeds divided between Milan and the other nominated beneficiaries in the event that the condition in clause 2(ii) was not satisfied.
Clause 7 reinforces that testamentary intention. It provides that the estate remains responsible for the payment of shire and water rates levied over the Property 'at all times'. In contrast, the clause provides that Milan is to be responsible for consumables connected with the use of the Property. This reflects a clear testamentary intention that the Property was not to be gifted to Milan absolutely unless and until the condition in clause 2(ii) was met or, alternatively, the Property was sold pursuant to clause 6.
Clause 5 is to be construed in the context of the plain effect of clauses 2(ii), 6 and 7 explained above. Clause 5 explains the Deceased's reasoning and purpose in allowing Milan a period of five years to make the payments required in clause 2(ii). The Deceased apparently understood that Milan wished to subdivide the Property and sell a portion of it. It may be inferred that the Deceased intended to allow Milan sufficient time (being five years) to explore and then decide if and how he might be able to develop the Property for his own benefit and, should he proceed with that course, pay out the beneficiaries, presumably by borrowing against the value of the Property.
[27] Second, fourth, sixth, seventh, eighth, ninth, tenth, eleventh and thirteenth defendants' responsive submissions for trial of preliminary questions filed 7 May 2021 [24] - [29] (Beneficiary Defendants' Submissions).
Galic submitted that the devise to Milan was beneficial and absolute. He asserts that the Will read as a whole does not reveal the existence of an imputed, implied or inferred intention that Milan was to hold the Property on trust for the persons nominated in cl 2(ii).[28] The main contentions in support of Galic's construction can be summarised as follows:
[28] First defendant's outline of submissions filed 7 May 2021 [43] (First Defendant's Submissions).
(1)the devise of the Property to Milan 'absolutely' in cl 2(i) is an indication it was beneficial and not qualified, restricted or fettered by any trust;[29]
[29] First Defendant's Submissions [44].
(2)there is an absence of any express reference to the existence of a trust over the Property in the terms alleged;[30]
(3)by cl 5, Milan was entitled to sell and/or subdivide the Property and live in such part of the Property as he chose to retain;[31]
(4) subdivision and/or sale of the Property was at Milan's cost and risk;[32]
(5)although Milan was entitled to use proceeds of sale of the Property or subdivided lots to make the payments provided for in cl 2(ii) should he choose to, he was under no obligation to do so;[33]
(6)Milan was under no obligation to account to the persons nominated in cl 2(ii) for the proceeds of sale of the Property or of any of the subdivided lots, nor was he required to account to those persons for any profits he might make on those proceeds or the use of the property;[34]
(7)there was no restriction on Milan recouping any costs in subdividing the Property and selling the subdivided lots from the proceeds of the sale;[35]
(8)Milan was under no obligation to keep any proceeds of sale from the Property separate from his own monies;[36]
(9)Milan was under no obligation to account to the persons nominated in cl 2(ii) for the value of the benefit to him in living on all or part of the Property, or of otherwise using it;[37]
(10) if the Property was held on trust, it would be expected that Milan would need the agreement of each of the eight persons nominated in cl 2(ii) to defeat their interests as beneficiaries under the trust. However, cl 6 contemplates that any two of those persons could agree to a different course;[38]
(11)if the reference to 'nine beneficiaries' in cl 6 includes Milan, then the ability of Milan to avoid cl 6 by himself reaching agreement with any one of the other eight beneficiaries 'does not sit comfortably with the suggestion he was a trustee'.[39]
[30] First Defendant's Submissions [45].
[31] First Defendant's Submissions [48].
[32] First Defendant's Submissions [50].
[33] First Defendant's Submissions [51].
[34] First Defendant's Submissions [52].
[35] First Defendant's Submissions [52].
[36] First Defendant's Submissions [53].
[37] First Defendant's Submissions [54].
[38] First Defendant's Submissions [58].
[39] First Defendant's Submissions [58].
In respect of whether the court should construe the gift as being subject to a condition, Galic submitted that the court would need to be satisfied of the existence of a clear intention that it should so operate. He contended that the reference to the Property being devised 'absolutely' to Milan in cl 2(i) negatives any suggestion it might have been conditional. That the Will, specifically, cl 5, expressly contemplated that Milan would subdivide and sell the Property before making the cl 2(ii) payments was said to be inconsistent with any suggestion that Milan's interest in the Property was conditional on making those payments.[40]
[40] First Defendant's Submissions [18].
Galic contended that the persons nominated in cl 2(ii), at highest, had an equitable charge over the Property to secure payment of the cl 2(ii) payments.[41]

Analysis

[41] First Defendant's Submissions [19], [60].

I broadly accept the submissions of Engelina and the Beneficiary Defendants that the gift of the Property to Milan was not absolute. Accordingly, I reject Galic's submissions that the gift was absolute.
Although cl 2(i) uses the word 'absolutely' it is not a stand alone clause; it is a subclause of cl 2. Clause 2(ii) makes it clear that the gift is conditional by expressly stating that the gift is 'on the condition that he shall pay out the following amounts'.
The Will is to be read as a whole. To read cl 2(i) as an absolute gift would require cl 2(ii) - which forms part of cl 2 - to be entirely disregarded.
It is apparent from the text of cl 2(ii) that Lucija gave careful consideration to the division of her estate amongst the beneficiaries, including what was to happen if one of the beneficiaries died. To hold that the gift to Milan was absolute would be to hold that Lucija's careful consideration was an exercise in futility.
In addition to the condition in cl 2(ii) requiring payment by Milan, cl 6 provides for a payment after five years in the event that the Property has not been sold in accordance with cl 2(ii).
Clause 3 gives Milan five years to make the payments referred to in cl 2(ii). In the event that he does not make the payments within five years (which he did not) and there was not unanimous agreement to extend the time (which there was not), then cl 6 becomes operative requiring the Property to be placed on the market immediately and the net proceeds divided as provided for in cl 2(ii) and cl 6. The requirement for Milan to sell the Property is incompatible with an absolute gift to Milan.
Again, to hold that the use of the word 'absolutely' in cl 2(i) overrides the balance of the Will is to disregard the evident consideration that Lucija gave to how Milan would finance the payment of the amounts to the other beneficiaries, by subdivision if necessary.
If the gift of the Property to Milan was absolute it would be too late to require Milan to sell the Property five years later; the Property would not be available for sale.
Once the five-year period expires, Milan loses the ability to make monetary payment to acquire the Property and the Property must be sold immediately. If the gift of the Property in cl 2(i) was absolute, again, the Property would not be available for sale and division of the net proceeds.
The payment of outgoings also supports a construction that the gift was not absolute. If the gift of the Property was absolute then it is difficult to see why or how the estate would be under an obligation to pay shire and water rates for something it has no interest in. Equally, why impose an obligation to pay water, gas, electricity and telephone charges on someone who has that obligation anyway if they are the absolute owner?
If Milan was gifted the Property absolutely then the requirement for the Property to be sold immediately at the end of five years if the payments to the beneficiaries had not been made would be pointless.
Galic's submission that the gift was absolute is not sustainable. For that argument to succeed, it would require the word 'absolutely' in cl 2(i) to be taken out of context when the Will, read as a whole, makes it clear and certain that the gift was not absolute.
In fact, the word 'absolutely' in cl 2(i) takes effect if, and only if, Milan had made the payments referred to in cl 2(ii) within the five‑year period.
Although there is no express use of the word 'conditional' in par 8 of the statement of claim it is apparent from par 8(c) of the statement of claim that Engelina's case is that the gift was conditional.
I do not accept that the fact that Milan might have subdivided and sold the Property before making the cl 2(ii) payments is inconsistent with the fact that Milan's interest in the Property was conditional on making those payments. Milan was permitted to subdivide the Property as one means of financing the payments to the other beneficiaries as provided for in cl 2(ii).
I accept Galic's submission that a trust is not to be inferred simply because the court thinks it is an appropriate means of protecting or creating an interest.[42]The question is whether the Will reveals an objective intention to create a trust in the terms alleged, not whether a trust might be imposed in order to give effect to cl 6.
[42] See Korda [11] (French CJ).
In this case, the onus lies upon Engelina, supported by the Beneficiary Defendants, to establish the existence of the trust as alleged.
Galic submitted that there was a difficulty in identifying the beneficiaries of any trust. I do not accept that the question as posed in 1(b) raises any difficulty identifying the beneficiaries of the trust. As question 1(b) states, the trust is for Milan and the eight cl 2(ii) beneficiaries.
Given that Milan did not receive the Property absolutely, the question which then arises is on what basis did Milan hold the Property in the five years from Lucija's death.

I do not accept that the Property was only the subject of an equitable charge to secure the payment of the amounts referred to in cl 2(ii). Clause 6 contemplates a sale if Milan has not made any payments within the five‑year period. The amount to be paid under cl 6 would almost inevitably have been different, as it was, to the value as at Lucija's death.
Clause 5 contemplates that Milan may subdivide the Property and sell it. Milan was not free to deal with the proceeds of sale of subdivided lots prior to making all of the cl 2(ii) payments. Until all those payments were made, Milan held the Property, and would have held the proceeds of sale of some or all of the Property, upon trust for the other beneficiaries and himself.
I accept Engelina's submission that Lucija's intention, as manifested in the Will, was to give the Property to Milan to be held by Milan upon trust as follows:
(a)Milan might take the whole of the beneficial interest in the Property if he first paid the other beneficiaries their respective proportions of the value of the Property determined in accordance with cl 4;
(b)Milan might sell the whole or part of the Property within five years of Lucija's death but he would be liable to account for the proceeds as trustee unless and until he made the payments contemplated by cl 2(ii); and
(c)if no payments were made within the five‑year period the Property would then be sold and the net proceeds dealt with in accordance with cl 6.
Galic submitted that where a gift is given 'on condition' that the recipient pay a sum of money to a third party, the gift will not be construed as subject to a condition precedent or condition subsequent unless an intention clearly appears that it should so operate, and in the absence of such a clear intention the reference to a 'condition' will be construed as imposing a personal obligation on the recipient of the gift.[43]
[43] First Defendant's Submissions [17].
The primary authority relied upon by Galic in support of the above submission is The Countess of Bective v The Federal Commissioner of Taxation.[44] In that case, Dixon J advanced four alternatives as to how a gift directing a payment to one person and expressing a purpose beneficial to another or others. That case only serves to emphasise that such matters are matters of construction of the relevant document.
[44] The Countess of Bective v The Federal Commissioner of Taxation [1932] HCA 22; (1932) 47 CLR 417, 419.
Clause 2 read with cl 6 makes it clear that the intention was that the payment of money under cl 2(ii) did not simply create a personal obligation. In the event that the payment required by cl 2(ii) was not made by Milan, he was obliged to sell the Property and divide the proceeds in accordance with cl 6. It went beyond imposing a personal obligation on Milan.
The Will does not refer to a 'trust' but the trust is not said to arise from a commercial contract as in Korda v Australian Executor Trustees (SA) Ltd,[45] a case heavily relied upon by Galic. Where two or more parties are negotiating a contract, it is more likely that a court will require a reference to a 'trust' to express their joint intention that a trust has been created than a testamentary trust involving only one party.
[45] Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62 [205] (Keane J).
The fact that Milan was entitled to subdivide the Property to fund the payment to the other parties does not mean that he was free to deal with the Property as he chose. He remained at all times obliged to make the relevant payments and after five years to sell the Property. After five years he was certainly not free to deal with the Property as he chose; he had to sell it.
The fact that Milan was permitted to deal with the Property in the sense that he could choose to subdivide it and to live on part of it does not alter the fact that he held it on trust.
Milan was a beneficiary of the trust along with the Beneficiary Defendants. It is not a case of Milan holding the Property on trust for himself alone.
Galic submitted that 'clause 6 contemplates that any two of those persons could agree to a different course'.[46]
[46] First Defendant's Submissions [58].
Clause 6 relevantly states that 'in the absence of any agreement between any of the nine beneficiaries referred to above, the Property is then to be placed on the market immediately'.
In the course of oral argument, counsel for the Beneficiary Defendants referred to the will as 'homemade'.[47] That statement was swiftly corrected but one can understand, having regard to the drafting, why the mistake was made.
[47] ts 19 (4/6/2021).
Clause 6 does not permit any two persons to agree to a different course. However, awkwardly, what cl 6 is saying is that any agreement to extend requires the unanimous consent of the beneficiaries. If any of the nine beneficiaries do not agree, or to use the terms of the Will, 'in the absence of [their] agreement', the Property is to be placed on the market.
That construction is consistent both with the limited period within which Milan had to act and the Property being placed on the market immediately if Milan had not acted. To submit that different beneficiaries could adopt different courses makes no sense.
As the Beneficiary Defendants correctly submitted, the trust would cease when:
(a)the payments under cl 2(ii) were made within the time period specified in cl 3 whereupon a gift of the Property to Milan would become absolute (and he would become the beneficial owner); or
(b)the Property was sold and the net proceeds of sale were divided under cl 6.
It is only upon the satisfaction of one of those two conditions that the trust would end. Pending satisfaction of one of those two conditions the Property was held for the benefit of the beneficiaries nominated in cl 2(ii) (or their successors) and Milan in his beneficial capacity.
I therefore find that on the proper construction of the Will, the Property was devised on trust for Milan and the beneficiaries nominated in cl 2(ii) of the Will with the gift of the Property to Milan only becoming absolute upon the satisfaction of the conditions specified in cl 2(ii) of the Will within the time specified in cl 3 of the Will as pleaded in par 3 of the Beneficiary Defendants' defence.

Question 2

Having concluded that the Property was devised to Milan to be held on trust, the second question as to whether cl 6 of the Will is void and of no effect by reason of repugnancy or inconsistency with a beneficial and absolute devise of the Property does not arise.

Question 3

Further or alternatively to questions 1 and 3, I must determine whether cl 6 is void and of no effect because it is too uncertain to be given effect.
The position of Engelina and the Beneficiary Defendants is that cl 6 was not void for uncertainty. The Beneficiary Defendants submitted that the terms of the clause are clear and that it does not contradict any other provision in the Will.[48]
[48] Beneficiary Defendants' Submissions [31] - [32].
Galic submitted that cl 6 was too uncertain to be given effect. The fact that the clause only applied in the absence of 'any agreement between any of the nine beneficiaries' was said to give rise to uncertainty because:
(a)it is unclear whether Milan is included as one of the nine beneficiaries;
(b)there is no requirement that the agreement be in writing or even that Milan be aware of its existence;
(c)it is unclear whether the agreement would permanently prevent forfeiture or only operate to suspend forfeiture and the nature of that suspension; and
(d)it is unclear whether further agreement could be reached and the nature of that further agreement.[49]
[49] First Defendants' Submissions [70] - [71].

Galic further questioned how cl 6 would apply if the Property had already been sold or subdivided and sold wholly or in part.[50]
[50] First Defendants' Submissions [72].
I do not accept that cl 6 is void for uncertainty.
Galic's submissions relating to the agreement are an effort to make something out of nothing. The agreement relates to extending the time to make the payments. Milan would necessarily have to be involved in such an agreement. The submission that the agreement could include two persons other than Milan simply does not arise as a matter of construction. Milan would necessarily have had to agree to an extension.
The agreement would be on the terms agreed between the parties, that is, Milan and the Beneficiary Defendants.
If the payments required by cl 2(ii) had not been paid within the five years, but Milan had subdivided and sold some of the Property, then he would be liable to account to the Beneficiary Defendants for the money received by him in accordance with normal trust principles.
Clause 6 is not void for uncertainty.

Conclusion

I accordingly determine the preliminary questions as follows:
(1)In response to question 1, on a proper construction of the Will, the Property was devised to Milan on trust for the beneficiaries nominated in cl 2(ii) of the Will with the gift of the Property to Milan only becoming absolute upon the satisfaction of the conditions specified in cl 2(ii) of the Will within the time specified in cl 3 of the Will, as pleaded in par 3 of the Beneficiary Defendants' defence.
(2) Question 2 is not applicable. The Property was not devised to Milan beneficially and absolutely upon Lucija's death.
(3) In response to question 3, cl 6 is not void for uncertainty.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SB
Associate to the Honourable Justice Curthoys
5 AUGUST 2022