Estate of Deidre Carolyn Peters

[2017] NSWSC 1405

Supreme Court

New South Wales

Medium Neutral Citation:	Estate of Deidre Carolyn Peters [2017] NSWSC 1405
Hearing dates:	9 October 2017
Decision date:	18 October 2017
Jurisdiction:	Equity
Before:	Emmett AJA
Decision:	1. Declare that the phrase “Inhereted Family Items”, as used in the will of Deidre Peters dated 7 September 2009, does not include the interest of Deidre Peters in the estate of her late step-mother, Helen Peters. 2. Order that the plaintiffs’ costs of these proceedings be paid out of the estate of Deidre Peters on the ordinary basis. 3. Summons be otherwise dismissed.
Catchwords:	SUCCESSION – wills, probate and administration – construction and effect of testamentary dispositions
Legislation Cited:	Conveyancing Act 1919 (NSW), s 26 Succession Act 2006 (NSW), s 32 Wills, Probate and Administration Act 1898 (NSW), s 61A
Cases Cited:	Nil
Texts Cited:	Nil
Category:	Principal judgment
Parties:	Adam Bradley Peters (First Plaintiff) Timothy Nigel Peters (Second Plaintiff) NSW Trustee and Guardian (Defendant)
Representation:	Counsel: D M Flaherty (Plaintiffs) S Chapple (Defendant)   Solicitors: Mitchell Reece & Associates (Plaintiffs) NSW Trustee and Guardian (Defendant)
File Number(s):	2015/242279
Publication restriction:	Nil

Judgment

1. These proceedings are concerned with the true construction of the last will of Deidre Peters (Deidre), who died on 11 May 2015. By her last will dated 7 September 2009 (Deidre’s Will), Deidre appointed the defendant, NSW Trustee and Guardian, (the Executor) as executor and trustee. At the time of making Deidre’s Will, the Executor was known as the Public Trustee of New South Wales. Probate of Deidre’s Will was granted to the Executor on 26 October 2015. The question of construction has been raised by the plaintiffs, Mr Adam Peters (Adam) and Mr Timothy Peters (Timothy), who are Deidre’s nephews and are beneficiaries under Deidre’s Will.

2. Adam and Timothy are brothers and are step-grandsons of Helen Peters (Helen), who died on 12 February 2015. Helen was survived by two step-children, Richard Peters (Richard) and Deidre. She had no biological children. Richard is the father of Adam and Timothy. It is convenient to refer to the members of the family by their first names, without intending any disrespect.

3. The question of construction relates to Deidre’s interest in Helen’s estate. It is therefore necessary to say something about Helen’s last will and her estate.

4. By her last will dated 25 January 2012 (Helen’s Will), Helen appointed Richard and Deidre as executors and trustees “of all my estate”. Clause 3 of Helen’s Will provided as follows:

“My executors shall HOLD my estate on trust to GIVE the residue of my estate to my said son RICHARD WILLIAM PETERS and my said daughter DEIDRE CAROLYN PETERS as shall survive me and if more than one in equal shares as tenants in common.” (Emphasis in original)

No other disposition was made by Helen’s Will. It is slightly curious, therefore, that cl 3 refers to “the residue of my estate”. However, “residue” might fairly be understood as referring to the balance remaining after all liabilities of Helen had been paid from her estate. Clearly, Helen’s Will made no disposition of any specific property.

5. At the time of her death, Helen owned a parcel of real property situated at Elanora Heights (the Elanora Heights Property) and three bank accounts. According to the inventory of property attached to the probate of Helen’s Will, the three accounts amounted to the sum of $127,633.21. Probate of Helen’s Will was purportedly granted to Richard and Deidre on 26 May 2015. [1] However, the purported grant to Deidre was of no effect, since she died on 11 May 2015 and it appears that Helen’s estate has been administered by Richard as sole executor.

   1. See Case No 15/95874 in the Probate List.

6. In the course of administration, Richard sold the Elanora Heights Property on 19 October 2016. The net proceeds of sale, after deducting all sale costs including the agent’s commission and legal fees, amounted to $1,172,892.16. Half of that amount belongs to Deidre’s estate, being $586,446.08. A partial distribution of $500,000 was made to Richard on 21 February 2017. The balance of $794,728.87 is presently held by Messrs Mitchell Reece & Associates, solicitors for Adam and Timothy. There is no evidence as to the proceeds of the three bank accounts owned by Helen at the date of her death.

7. Against that background, it is necessary to explain Deidre’s Will. After revoking previous testamentary acts and appointing the Executor as executor and trustee, Deidre’s Will relevantly provided as follows:

“GIFTS

Specific Gift

3.1   I give Inhereted [sic] Family Items to those of my nephew ADAM BRADLEY PETERS and my nephew TIMOTHY NIGEL PETERS who survive me.

3.2   If my beneficiaries cannot agree which of them should take any particular item included in this gift my Trustee will decide and they must abide by my Trustee’s decision.

RESIDUE

4.   I direct that the rest of my estate be used first to pay my estate liabilities. After payment of my estate liabilities, I give the rest of my property to my Trustee to distribute as follows:-

…”

There then followed a gift of a 12.5% share of the Testatrix’s net estate to each of three named individuals and to five named charities. Deidre’s Will also contained clauses under the following headings:

FUNERAL

TRUSTEE’S POWERS

POWER TO APPROPRIATE ASSETS

30 DAY SURVIVORSHIP

CAPITAL GAINS LIABILITY

ESTATE LIABILITIES

The question raised in the proceedings is the proper construction of the phrase “Inhereted [sic] Family Items” when used in cl 3.1 of Deidre’s Will.

8. At the date of her death, Deidre was the owner of a parcel of real property situated at Newport and was also the owner of seven bank accounts and a superannuation policy. In addition, she owned some items of personal property, which were included in the inventory of property attached to the probate of Deidre’s Will as “Other Personal Property”. The other personal property is described as “Inherited Family Items” and is estimated as having a value of $1000. There is no further particularisation of the “Inherited Family Items” in the inventory of property. Clearly enough, Deidre also had an interest in Helen’s estate. Curiously, however, there is no reference to Deidre’s interest in Helen’s estate in the inventory of property.

9. Adam and Timothy contend that, on its proper construction, the phrase “Inhereted Family Items”, when used in cl 3.1 of Deidre’s Will, should be understood as including Deidre’s interest in Helen’s estate. By their summons dated 10 May 2017, filed in the proceedings in which probate of Deidre’s Will was granted, Adam and Timothy sought a determination as to whether, upon the true construction of Deidre’s Will, the gift to them of “Inhereted Family Items” includes half of the net proceeds of sale of the Elanora Heights Property. In the course of argument, they expanded their claim so as to extend to the whole of Deidre’s interest in Helen’s estate.

10. Adam and Timothy contend that, having regard to the use of capital letters, the phrase “Inhereted Family Items” should be construed as a composite phrase. Thus, they say, an object, thing or chose in action, whatever it may be, will satisfy that description if it is “inhereted” by Deidre, it pertains to “family” and is an “item”: if an object, thing or chose in action owned by Deidre at the time of her death satisfied those requirements, it passed to Adam and Timothy by the operation of cl 3.1 of Deidre’s Will. They contend that Deidre’s interest in Helen’s estate satisfies those three prerequisites.

11. That is to say, Adam and Timothy assert that Deidre’s interest in Helen’s estate was “inherited” from Helen and Helen was Deidre’s “family”. In that regard, it is significant that there was no specific devise or gift to Richard and Deidre in Helen’s Will. Rather, cl 3 of Helen’s Will speaks in terms of a gift of “the residue of my estate” to Richard and Deidre. There is no mention of any specific property. More particularly, there is no mention of the Elanora Heights Property. There is no property of Helen’s that can fairly be characterised as having been inherited by Deidre.

12. The position might have been different if there had been a specific devise or gift in Helen’s Will of either the Elanora Heights Property or an undivided share in the Elanora Heights Property as tenant in common. In that case, it might fairly be said that the Elanora Heights Property or a share in the Elanora Heights Property had been inherited by Deidre from Helen. However, in the events that had happened, as at the date of Deidre’s death, she had no interest or right other than an entitlement to have Helen’s estate administered according to law by her legal personal representatives. As I have indicated, at the date of Deidre’s death, probate of Helen’s Will had not been granted. The inchoate right that vested in the Executor upon the grant of probate of Deidre’s Will, assuming that the right could constitute an “item”, could not fairly be characterised as having been “inherited”.

13. Adam and Timothy say that Deidre’s interest in Helen’s estate can be characterised as an “item”. They contend that the term “item” involves a concept of being separate or being different from other things, namely, something that can stand alone. Thus, they say, there is no reason why the term could not refer to an interest in a deceased estate. The preferable construction is that the word “Items” refers to chattels or items of personal property. As a matter of ordinary English, the word signifies an individual article or unit, especially one that is part of a list, a collection or a set.

14. Adam and Timothy rely on the operation of s 26 of the Conveyancing Act 1919 (NSW). Section 26 relevantly provides that, in the construction of a will, a disposition of the beneficial interest in any property, whether with or without the legal estate, to or for two or more persons together beneficially, is to be deemed to be made to or for them as tenants in common, and not as joint tenants. Adam and Timothy contend that, because of the operation of s 26, the question of disagreement or the need for the Executor to make a decision does not arise. In the absence of cl 3.2, s 26 may have had some relevance to the operation of cl 3.1 alone, insofar as there may have been a question as to whether Adam and Timothy were to take any “Inhereted Family Items” as joint tenants or tenants in common. However, it is clear that Deidre did not intend to give any “Inhereted Family Items” to Adam and Timothy jointly. The mechanism of cl 3.2 was designed to ensure that any property that was the subject of the gift in cl 3.1 was to go to either one or other of Adam and Timothy. If they could not agree which one of them should inherit a particular item, it would be a matter for the Executor to decide between them. The construction of Deidre’s Will contended for by Adam and Timothy would leave no work for cl 3.2. I do not consider s 26 bears on the question of the construction of Deidre’s Will.

15. Thus, the gift in cl 3.1 of Deidre’s Will must be construed in the light of cl 3.2 and the two clauses must be read together. Clause 3.2 contemplates that there may be a plurality of “items” to which Adam and Timothy are to be entitled. It would be a curious result if the Executor was required to choose who, as between Adam and Timothy, would receive the “item” consisting of Deidre’s interest in Helen’s estate. When cl 3.1 is read with cl 3.2, it seems improbable that the phrase “Inhereted Family Items” was intended to include an item such as a parcel of real property or an interest in a deceased estate, such that the Executor would be required to confer a disproportionate benefit upon either Adam or Timothy, according to the decision made by the Executor under cl 3.2.

16. The phrase in question should be construed as referring only to personalty of Deidre’s that might fairly be characterised as family heirlooms. Strictly, the term “heirloom” refers to special goods and chattels that, contrary to the ordinary nature of chattels, by custom passed to the heir along with the inheritance, instead of to the executor or administrator of a deceased’s estate. However, the term can refer to personal property and items such as jewellery, art treasures, furniture and collectables that have been passed down through a family for generations and might be expected to remain in the family. [2] Of course, Deidre’s Will did not use the term “heirloom”. Nevertheless, I would construe the phrase “Inhereted Family Items” as having a meaning similar to the ordinary meaning of the word “heirloom”. The phrase “Inhereted Family Items” should be construed as referring to property in the nature of heirlooms that may have been owned by Deidre and which she inherited from her family. I do not consider that the phrase is apt to refer to an interest in a deceased estate, such as Helen’s estate, simply because Helen and Deidre were members of the same family. The word “Items” must be understood as referring to specific chattels or things and not choses in action, such as an interest in Helen’s estate.

    2. See LexisNexis Australian Legal Dictionary, (2nd ed, 2016), at 716 and Shorter Oxford English Dictionary, Volume 1, (5th ed, 2002) at 1221.

17. The use of capitals in the phrase “Inhereted Family Items” might suggest that the phrase was defined. However, there is no definition in Deidre’s Will. The Executor points to earlier wills made by Deidre as throwing light on the meaning of the phrase and which explain the use of capitals. The Executor relies on s 32 of the Succession Act 2006 (NSW), which relevantly provides that, in proceedings to construe a will, evidence, including evidence of the testator’s intention, is admissible to assist in the interpretation of the language used in the will if the language makes the will or any part of the will:

(a)   meaningless; or

(b)   ambiguous on the face of the will; or

(c)   ambiguous in the light of the surrounding circumstances.

The Executor contends that, having regard to the competing constructions advanced by the parties, Deidre’s Will is ambiguous on its face and in the light of the surrounding circumstances. The Executor therefore sought to rely on extrinsic material concerning Deidre’s will-making history in the event that the Court concluded that, on its face, the construction contended for by Adam and Timothy was open.

18. Adam and Timothy objected to the evidence of Deidre’s prior will-making history. However, I admitted the evidence without prejudice to their entitlement to contend that the basis for having regard to it had not been established. I have concluded, from the terms of Deidre’s Will itself, that Deidre’s interest in Helen’s estate was not an “Inhereted Family Item” within the meaning of cl 3.1. Strictly, therefore, it is not necessary to have regard to the material. Nevertheless, it is desirable to deal with it, insofar as there might be thought to be ambiguity.

19. On 24 October 1991, Deidre made a will (the 1991 Will) in which she bequeathed to Adam and Timothy in equal shares absolutely:

“… my ‘Inherited Family Items’ (as identified by a list to be kept at my home and attached to a copy of this my Will)”.

In the 1991 Will, provision was made for the Trustee to “hand” such “items” to Richard if Adam and Timothy had not attained their majority and were still minors when the property was ready for distribution. It would not be possible to “hand” an interest in a deceased estate or a parcel of land to anyone. The 1991 Will then went on to give and bequeath the “residue of my household chattels as defined in Section 61A of the Wills Probate and Administration Act, 1898” to a named friend of Deidre’s, expressing the wish that the friend would distribute such items in accordance with instructions given to him by Deidre during her lifetime. The use of the word “residue” suggests that the inherited family items were perceived as chattels.

20. On 16 April 1998, Deidre made another will (the 1998 Will) in which she gave to Adam and Timothy:

“… all my ‘Inherited Family Items’ (as identified by a list to be kept at my home)”.

In the 1998 Will, provision was made for the Trustee to “hand” “this property” over to the parent or guardian of Adam and Timothy if Adam and Timothy had not attained their majority and were still minors when the property was ready for distribution. The 1998 Will then contained a gift of “all the rest of my household goods” to a named friend of Deidre’s. The same observations as have been made in relation to the 1991 Will are equally applicable to the 1998 Will.

21. Adam and Timothy attach some significance to the omission from Deidre’s Will of the possessive pronoun “my” that preceded the phrase “Inherited Family Items” in the 1991 Will and the 1998 Will, on the basis that the departure in the drafting of Deidre’s Will from the language that had been employed in the earlier wills might be seen as reflecting a conscious intention to change. That appears to me to be unlikely. There is no reason to conclude that, in making the will of 7 September 2009, Deidre was intending to change the scheme of her gift of specific items to her nephews that can fairly be characterised as items that were inherited from her family in the nature of heirlooms.

22. In June 2002, Deidre wrote to the Executor saying that she wished to alter her will to leave her “real estate, motor vehicle, money in the bank superannuation and household goods etc” to a named beneficiary and for the “Inherited Family Items” to be given to her nephews “in the care of [her] brother”. Deidre executed wills on 20 June 2002 and 16 October 2004 consistently with those instructions. In her Will of 20 June 2002, Deidre gave the remainder of her property, after the bequest of “Inhereted Family Items” and a $10,000 legacy, to a named friend, with a gift over to Adam and Timothy if the friend did not survive her. That indicates that “Inherited Family Items” were not intended to include interests in deceased estates or in real estate.

23. Under all of her earlier wills, Deidre evinced an intention that Adam and Timothy would have a first claim on property that constituted “Inherited Family Items”. However, in each case, her estate, other than the relevant “items”, went, in the first instance, to named individuals or charities. There is no basis for concluding that Deidre ever evinced an intention that property would pass to Adam and Timothy merely because it was inherited from her family.

24. Adam and Timothy are not entitled to the relief claimed in the summons. Rather, there should be a declaration that the phrase “Inhereted Family Items”, when used in Deidre’s Will, does not include Deidre’s interest in Helen’s estate. The Executor does not oppose the making of an order that Adam and Timothy’s costs of the proceedings for the construction of Deidre’s Will be paid out of Deidre’s estate on the ordinary basis.

**********

Endnotes

Decision last updated: 18 October 2017