Greenham v Greenham
[2020] VSC 749
•16 November 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 03124
| Jennifer Robyn Greenham (as executor of the estate of Ethel Elizabeth Greenham) | Plaintiff |
| v | |
| Alan Lindsay Greenham | Defendant |
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JUDGE: | MOORE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 February and 18 March 2020 and written submissions filed 23, 31 March and 7 April 2020 |
DATE OF JUDGMENT: | 16 November 2020 |
CASE MAY BE CITED AS: | Greenham v Greenham |
MEDIUM NEUTRAL CITATION: | [2020] VSC 749 |
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WILLS AND ESTATES – Judicial advice – Whether devise of ‘real estate’ includes water shares – Where will was made at a time when water rights ran with land rights – Where water rights were subsequently unbundled from land rights and transformed into personal property – Whether the terms of the will should be construed as at the time of the testator’s death or the time that the will was made – Will manifests an intention that it should be construed as at the time that the will was made – Devise of ‘real estate’ includes water shares – Wills Act 1997, ss 34 and 36 – Perrin v Morgan [1943] AC 399, applied – Marley v Rawlings [2015] AC 129, applied – McBride v Hudson (1962) 107 CLR 604, applied – Evans v Powell (1909) 1 Ch 784, applied – Martin v Martin [2010] NSWSC 700, distinguished.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | N McOmish | Phillips & Wilkins |
| For the Defendant | A Donald | Joliman Lawyers |
HIS HONOUR:
Ethel Elizabeth Greenham died on 11 February 2017 at 80 years of age. By her will dated 9 December 2003, she devised a parcel of land at Pental Island on the Murray River (the land) to her son Alan Lindsay Greenham, leaving the residue of her estate to her daughter, Jennifer Robyn Greenham.[1]
[1]Without any disrespect to the parties, in the interests of clarity, I will refer to the parties and their partners by their first names.
Probate in respect of the will was granted to Jennifer on 4 April 2019. The deceased’s estate was valued at $2,129,506.39.
The present controversy concerns three valuable water shares issued under the Water Act 1989 which were owned by the deceased (the water shares).[2] If those shares form part of the devise of ‘real estate’ under the will, they pass to Alan; if they are part of the residue of the estate, they pass to Jennifer. In this proceeding commenced under r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015, Jennifer seeks a declaration that they form part of the deceased’s residuary estate.
[2]According to the Inventory of Assets and Liabilities dated 27 March 2019, the total value of the water shares was $754,850. However, the evidence before the Court is that, as at 7 August 2019, their value was approximately $1,589,580.
The determination of Jennifer’s claim turns upon the proper construction of clause 4(d) of the will. By that clause, the deceased devised to Alan:
… my real estate at Pental Island being Allotment 7 in the Parish of Pental Island County of Tatchera and being the land comprised in Crown Grant Volume 9429 Folio 754.
The question for determination is whether, properly construed, the reference to ‘my real estate at Pental Island’ includes the deceased’s water shares.
Background
The land is about 310 acres in area. It was purchased in 1939 by Alan and Jennifer’s grandfather and used as a farm. Farming activities are still operated on the land, but a caravan park and holiday business (the caravan park) is now the main commercial enterprise conducted on it. Alan and his wife, Mary Greenham, live in a house situated on the land and operate the caravan park and carry on the farming activities.
The land does not have access to town water. The only source of water for the farm and the caravan park operated on it is rainfall and the Murray River which abuts the land.
It was common ground that, in Victoria until 1 July 2007, water flowing in a watercourse was not property capable of being owned and transferred separately to land. The rights at common law to use water flowing in a water course were derived from a person’s ownership or occupation of land abutting the watercourse.[3] As Bryson J explained in Elders Rural Finance Ltd v Westpac Banking Corporation:[4]
At common law a land owner’s right to the use and flow of water was enforceable by litigation, the cause of action being nuisance against persons who interrupted the flow or made excessive use of their own water rights. Flowing water is not itself an subject of property at common law, but an owner of land (and it is convenient to speak of freehold land) past or under which water flows in a defined stream or percolated could take it and use it. … Sir Robert Megarry and Professor Wade in The Law of Real Property, 5th ed, at p 65 state riparian rights thus when dealing with the land owner's right to everything on or over his land and the qualifications on that general rule.
A land owner has no property in water which either percolates through his land or flows through it in a defined channel. In the case of percolating water, at common law the land owner could draw any or all of it off without regard to the claims of neighbouring owners; … In the case of water flowing through a defined channel, even at common law the riparian owner (the owner of the land through which the water flows) could not always take all the water; but he has certain valuable rights.
[3]Kate Stoeckel et al. Australian Water Law (Thomson Reuters, 2012), [2.20]; Gartner v Kidman (1962) 108 CLR 12, 32.
[4](1989) 6 BPR 13439, 13,443-4.
This situation was fundamentally changed on 1 July 2007 following amendments to the Water Act 1989. These amendments introduced a regime, referred to colloquially as ‘unbundling’, that allowed property rights to water to exist separately from ownership of land.[5] The Minister could issue a ‘water share’ in respect of a ‘declared water system’.[6] A water share ‘authorises the taking of water under the water allocation for the share during the water season for which the water allocation is allocated’.[7] Ownership of a water share could be transferred independently of a transfer of land and, on the death of the owner, forms part of their estate.[8]
[5]The amendments to the Water Act 1989 were made by the Water (Resource Management) Act 2005. On 19 June 2007, an ‘Order declaring water systems in Northern Victoria’ was made pursuant to s 6A of the Water Act 1989 as amended. The order took effect from 1 June 2007.
[6]Water Act 1989 s 33F(1).
[7]Water Act 1989 s 33F(2).
[8]Water Act 1989 ss 33S(1), 33AV(1).
The three water shares owned by the deceased are issued in relation to the Murray River water system. They comprise a water share of 247 mega litres (classified as ‘high’ reliability and which is used for the farm operated on the land); a water share of 12 mega litres (also classified as ‘high’ reliability which is used for the caravan park and house on the land); and a water share of 118.6 mega litres (classified as ‘low’ reliability).
The deceased’s wills
The deceased made her will on 9 December 2003, several years before the commencement of the above amendments to the Water Act 1989.
The clauses of the will of particular relevance to this proceeding are cls 4 and 5 which provide as follows:
4. I GIVE to my Son, the said ALAN LINDSAY GREENHAM for his sole use and benefit absolutely my interest in: -
(a) all livestock owned by me at the date of my death;
(b) all farming plant and equipment with the exception of any private car owned by me at the date of my death;
(c) any shares which I may own in the Pental Island Caravan Park and Holiday Farm Pty Ltd;
(d) my real estate at Pental Island being Allotment 7 in the Parish of Pental Island County of Tatchera and being the land comprised in Crown Grant Volume 9429 Folio 754.
5. I GIVE the rest and residue of my estate of whatsoever kind and wheresoever situate to my Trustees UPON the following Trusts: -
(a) to pay thereout all my unsecured debts, funeral, monumental and testamentary expenses including all Probate and Estate duties, if any;
(b) to pay or transfer the balance of my estate to my Daughter, the said JENNIFER ROBYN GREENHAM, for her sole use and benefit absolutely.
The deceased made a previous will on 9 May 1995 (the 1995 will). The 1995 will also included a devise of the deceased’s real estate to Alan, although it was cast in different terms to that set out above and was conditional on Alan paying Jennifer the sum of $100,000 within two years from the date of the deceased’s death.[9]
[9]Subclauses 4(a)-(c) of the 1995 will were in the same terms as those clauses in the will set out in [11] above. Clause 4(d) of the 1995 will provided as follows:
‘the real estate comprising the Pental Island Caravan Park and farm at Pental Island being the land comprised in Certificate of Title Volume 9429 Folio 754 to my Son the said ALAN LINDSAY GREENHAM subject and conditional to him paying to my Daughter the said JENNIFER ROBYN GREENHAM the sum of $100,000.00 within two years from the date of my death, such sum to be paid interest free save and except that in the event of my said Son defaulting in paying the said sum within two years as aforesaid then I direct that he shall pay interest for the period of default at a rate equal to the rate then charged by the Westpac Banking Corporation in relation to bank overdrafts of a similar magnitude. The payment of such sum of $100,000.00 from ALAN LINDSAY GREENHAM to JENNIFER ROBYN GREENHAM to be secured by a charge over the said real estate’.
Clause 5 of the 1995 will provided for the residue of the deceased’s estate to pass to Jennifer.
Wills - principles of construction
The ‘fundamental rule’ in construing 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 – which are the “expressed intentions” of the testator’.[10] The task is to ‘find the deceased’s intention as expressed in her words in the will’;[11] ‘not what she meant to say, but what she actually said’.[12]
[10]Perrin v Morgan [1943] AC 399, 406 (Viscount Simon LC).
[11]Lutheran Church of Australia South Australia District Incorporated v Farmers’ Co-operative Executors and Trustees Ltd (1970) 121 CLR 628, 638 (Barwick CJ).
[12]Farrelly v Phillips (2017) 128 SASR 502, 510 [32] (Stanley J).
Unless indicated otherwise, the words used by a testator will be given their usual or ordinary meaning. However, as stated by Isaacs J in Fell v Fell, although a will:[13]
… must receive a construction according to the plain meaning of the words and sentences therein contained… 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.
[13]Fell v Fell (1922) 31 CLR 268, 273–4 (Isaacs J) (emphasis in original).
The following two other principles formed part of what Isaacs J referred to in Fell v Fell as ten ‘incontestable’ principles relevant to the construction of wills:[14]
An inference cannot be made “that did not necessarily result from all the will taken together”…A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed.
“We cannot give effect to any intention which is not expressed or plainly implied in the language of” the “will”… “You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication”.
[14]Fell v Fell (n 13) 274 (Isaacs J) (emphasis in original).
A will is not, however, to be construed in a vacuum.[15] In Perrin v Morgan, Lord Romer referred to the:[16]
… cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. To understand the language employed by the court is entitled, to use a familiar expression, to sit in the testator’s armchair. When seated there, however, the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said.
[15]‘No will can be analysed in vacuo’: Perrin v Morgan (n 10) 414 (Lord Atkin).
[16]Perrin v Morgan (n 10) 420.
By placing itself in the ‘testator’s armchair’ in order to determine the testator’s intention, the Court is able to ‘consider the circumstances by which [the testator] was surrounded when he made his will’.[17] The surrounding circumstances may include evidence of the testator’s family, property, friends and acquaintances.[18]
[17]Boyes v Cook [1880] 14 Ch D 53, 56.
[18]See, for example, Phillips v McCabe [2016] SASC 27, [14].
Consideration of this type of extrinsic evidence is not limited to or conditional upon the existence of ambiguity in the terms of a will. Under the armchair rule, evidence of the factual matrix in which a testator made their will ‘is always admissible to explain what the testator has written, and to show the meaning of his words, and this evidence is totally distinct from evidence sought to be applied to prove the testator’s intention as an independent fact‘.[19] As the High Court stated in King v Perpetual Trustees Company Ltd, ’it is from the words of the will that the intention of the testator must be ascertained, aided only by such facts as existed and were known to the testator at the date of the will which it is permissible to take into account in interpreting that language.’[20] This reflects the fact that ‘the meaning of words varies according to the circumstances of and concerning which they are used’.[21]
[19]In the Will of Loughlin; Acheson v O’Meara [1906] VLR 597, 601 (Hood J), citing James Wigram, Examination of the Rules of Law, respecting the Admission of Extrinsic Evidence in Aid of the Interpretation of Wills (London, Sweet and Maxwell) 10. See also Lang & Ors v Davey & Ors [2020] SASC 160, [39] (Bampton J); The TrustCompany Limited Ltd & Anor v Zdilar & Ors (2011) 4 ASTLR 379, 384–385, [21] (M Wilson J); Suthers & Anor v Suthers & Ors [2015] QSC 285, [4] (Burns J); David Malcom Haines, Construction of Wills in Australia (LexisNexis Butterworths, 2007) [5.3].
[20]King v Perpetual Trustee Company Ltd (1955) 94 CLR 70, 78.
[21]Allgood & Ors v Blake (1873) LR 8 Ex 160, 162 (Blackburn J).
This is consistent with the contemporary approach to the interpretation of contracts. In Marley v Rawlings, Neuberger LJ succinctly formulated that approach in the following terms:[22]
When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party’s intentions.
Lord Neuberger continued:[23]
When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context.
[22]Marley v Rawlings [2015] AC 129, 144 [19], 145 [23] (Lord Clarke, Lord Sumption, Lord Carnwath and Lord Hodge JJSC agreeing).
[23]Marley v Rawlings (n 22) 144 [20].
Evidence which bears upon the factual context in which a will is made is therefore relevant to the task of construction. Lord Neuberger’s observations in Marley v Rawlings have been applied on numerous occasions by Australian courts in relation to the construction of wills.[24]
[24]Public Trustee v Cole [2019] QSC 298, [37] (Davis J) (second quotation); Davies v Davies (No 2) [2019] QSC 294, [8] (Bradley J); Roberts v Pollock [2019] QSC 184, [46] (Davis J); Re Lapalme; Daley v Leeton (2019) 60 VR 71, 76–7 (McMillan J); Chan v Valmorbida [2019] VSC 336, [19] (Daly AsJ); Wright v Stevens [2018] NSWSC 548, [181] (Hallen J); Re Islik [2018] VSC 59, [41] (Riordan J); Farrelly v Phillips (2017) 128 SASR 502, [29] (Stanley J, Kourakis CJ and Nicholson J agreeing); Trenberth v Trenberth [2016] SASC 150, [94] (Bampton J); Fielder v Burgess [2014] SASC 98, [42] (Kourakis CJ); Re Nies [2014] SASC 93, [14] (Gray J).
In addition to the position at common law, s 36 of the Wills Act 1997 (the Wills Act) also addresses the admissibility of evidence in proceedings to construe a will. Section 36 states:
36 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.
As recently stated by Hallen J in Serwin v Dolso, language used in a will:[25]
… is ambiguous if it can reasonably be interpreted in more than one way, or the words used can reasonably be given more than one meaning. The ambiguity may be apparent on the face of the will itself or when construed in the light of the surrounding circumstances.
[25]Serwin v Dolso [2020] NSWSC 370, [66].
Although cast in wide terms, two limits on the operation of s 36 of the Wills Act should be noted. First, assuming one or other of the conditions in sub-s (1) are engaged, it is not licence to admit any evidence; evidence may be admitted ‘to assist in the interpretation’ of the language used in will. Evidence which does not bear upon the proper construction of the testator’s language used in a will should not be admitted. Secondly, the operation of sub-s (2) is not to be overlooked; where uncertainty or ambiguity arises in the light of the surrounding circumstances, evidence of the testator’s intention may not be admitted.
Extrinsic evidence
Jennifer’s primary submission
Jennifer’s primary submission was that extrinsic evidence was not admissible in determining the proper construction of sub-cl 4(d) of the will because the words ‘my real estate at Pental Island…being the land’ appearing in the clause were not meaningless, uncertain or ambiguous on the face of the will, or in the surrounding circumstances.
I do not accept this submission. First, as I have explained, evidence of the surrounding circumstances in which a testator made a will is always admissible at common law under the armchair rule to ascertain the testator’s intention expressed in the words contained in the will.
Secondly, pursuant to sub-s 36(1)(c) of the Wills Act, I consider that the language used in cl 4 of the will renders the will, and in particular cls 4 and 5, uncertain or ambiguous in light of surrounding circumstances. The critical circumstance surrounding the making of the will is the fact that, when it was made, the deceased had common law riparian water rights which were appurtenant to her ownership of the land. Those rights, ‘went with the land’ and were incapable of being transferred separately to the land. These matters were not controversial.
Alan submitted that this analysis was consistent with and reinforced by the dispositions provided by sub-cls 4(a)-(c) of the will by which the deceased gave to Alan the livestock, farming plant and equipment and shares in the company which operated the farm and caravan park. It was submitted that this was all of the property which went with the farm and the caravan park such that it was apparent from the clauses that the deceased intended to give Alan the entire ‘kit and caboodle’. The devise to him of the land and the attached common law riparian water rights was submitted to be consistent with that intention.
I will later consider the merit of these submissions. For present purposes it is sufficient to determine that, despite the apparent clarity in the text of sub-cl 4(d) of the will, it is in fact uncertain or ambiguous in light of the surrounding circumstances to which I have referred. Contrary to Jennifer’s submissions, the fact that separate property rights in water did not exist when the will was made does not mean that there is no uncertainty or ambiguity in the will in light of surrounding circumstances.
That uncertainty and ambiguity is further highlighted when regard is had to the provision made by 34 of the Wills Act. That section provides that, subject to any contrary intention, a ‘will takes effect, with respect to the property disposed of by the will, as if it had been executed immediately before the death of the testator’. As I have explained, in contrast to the situation which pertained when she made the will, immediately before her death, the deceased owned the water shares which were capable of being transferred independently of the land.
I have already set out in [5]-[6] above important background facts to this proceeding. Below, I record my other principal findings of fact in respect of the extrinsic evidence relied upon by the parties in their submissions on the proper construction of the will.[26] I will later address the relevance and significance of these findings when considering the parties’ submissions.
[26]Jennifer relied upon and made submissions about extrinsic evidence in the alternative to her primary submission addressed above.
Findings of fact
The deceased and her husband carried on the farm and caravan park until the deceased’s husband died in 1987. Alan and the deceased then jointly operated the farm and caravan park for 10 years until the deceased retired and moved off the land in 1997. Since then, Alan and Mary have run the farm and the caravan park. The caravan park is the principal income producing asset.
The corporate entity through which the caravan park has been operated is Pental Island Caravan Park & Holiday Farm Pty Ltd (the company), the entity referred to in sub-cl 4(c) of the will. The deceased was a director of the company until 12 November 2003. Alan was appointed a director on 27 March 1987 and Mary was appointed secretary of the company on 7 December 1998.[27]
[27]Alan is now the sole director of the company and Alan and Mary hold all of the shares in the company.
In most years, the farm requires the entire water share in the volume of 247 mega litres to operate.[28] On the basis of Alan’s evidence which I accept and the matters referred to in [6], it is clear that the successful operation of both the farm and the caravan park is dependent upon access to water from the Murray River.
[28]See the water shares referred to in [9] above.
Jennifer has lived in Melbourne for most of her adult life. She returned to the farm in 1987 for three or four months to support the deceased after the deceased’s husband died. From then until when the deceased retired in 1997, Jennifer regularly visited the farm and supported her mother by working in the reception at the caravan park, answering telephone calls and by cleaning the facilities at the caravan park. In 1995, Jennifer quit her job and did the deceased’s job at the farm and caravan park for about three months while the deceased went on holidays.
A family meeting attended by the deceased, Alan, Mary, Jennifer and her former partner occurred on 31 August 1997 (the August 1997 meeting). The meeting was prompted by the deceased’s wish to retire off the land and to move into Swan Hill and to discuss the distribution of the deceased’s assets after her death. Handwritten notes of the meeting and subsequent correspondence relevant to it were in evidence.
In the August 1997 meeting, Alan said that he wanted to ‘extinguish’ the requirement in the 1995 will that he pay Jennifer $100,000.00 within two years of the deceased’s death. He also said that he wanted assurance of tenancy rights on the land and to ‘accrue equity in [the] farm’.
It was agreed at the meeting that, from 1 July 1998, the deceased would rent the land to Alan for $1,083.00 per month ($13,000 per annum), indexed to the consumer price index and to be reviewed annually. A draft lease was later prepared, but not executed.
It was discussed during the August 1997 meeting, and generally agreed, that Jenny would sign an agreement ‘not to make claim on the farm and park’ and that Alan would sign an agreement not to make any claim on the houses owned by the deceased or her other investments.[29] No such agreements were, however, subsequently entered into.
[29]The deceased then owned two houses in Swan Hill.
The topic of water, or water rights, was not mentioned during the August 1997 meeting.
Several days after the meeting, Jennifer agreed to Alan’s request that the requirement in the 1995 will for him to pay her $100,000 be extinguished. She did so to facilitate the deceased’s move into Swan Hill and to facilitate Alan and Mary’s security of tenure on the land.
The deceased moved off the land and into Swan Hill in late September 1997. Alan then took over control of the caravan park business and the farm. He did not pay any amount to purchase the caravan park from the deceased. From July 1998, he commenced paying the deceased the rent referred to in [37] and continued to do so until her death 18 years later. The amount of the rent was unchanged over that period. Alan considered that payment of the rent gave him an entitlement to operate the farm and the caravan park.
Either during or subsequent to the August 1997 meeting, Alan sought to be gifted the deceased’s loan account of $80,000 which was recorded in the company’s accounts. Alan did not subsequently repay the loan account. He considered it to be a ‘sweetener so we’d lease … the place’.
In 2004, the deceased sold one of her investment properties and loaned Jennifer $150,000 to pay her former partner following the end of their relationship. Between 2004 and 2011, Jennifer made repayments to the deceased of $400 per month. On the deceased’s request, Jennifer ceased making these payments in 2011. Jennifer maintained a good relationship with the deceased until her death.
Between 18 October 2007 and 21 March 2009, the deceased signed four ‘applications to trade water allocations’ to sell a total of 130 mega litres of water for $76,400 (the water trades). It was Alan, not the deceased, who decided to make these trades. He did so for the purpose of managing the farming activities on the land in light of the then drought conditions. He explained to the deceased his reasons for the proposed water trades and, as the person having control of the farm and the caravan park, put the relevant forms in front of her, saying, in effect ‘sign here’. According to Alan, it was obvious to him that the deceased knew that, by signing these documents, water was being traded. At no time though did he explain to the deceased that the ‘water existed separately from the land’.
It was common ground that, at least until about 2012, the deceased was an organised, informed and intelligent woman who was involved in her local community.
In September 2016, Alan was told by the deceased’s financial planner that the deceased needed to be assisted by a carer and that further costs would be incurred as a result. Alan refused a request by the financial planner to increase the rent he paid in respect of the land.
There is no evidence before the Court indicating that, at or before the time she made the will, the deceased spoke about water generally, in connection with the land, or the activities undertaken on it.
Evidence of Christopher Mahon
Christopher Mahon is a retired solicitor who practised in the Swan Hill district from 1979 to 2018. Mr Mahon’s legal practice included significant work in relation to land matters, wills and probate, especially wills disposing of farming land. Although he did not draw the deceased’s will and never acted for the deceased, he drew many wills in the years before the amendments to the Water Act 1989 in 2007 to which I have referred. Mr Mahon’s evidence was that, in his experience of drawing wills and reading other wills disposing of farming land before the unbundling, the phrase ‘real estate’, when used in respect of farming land, invariably encompassed any water rights in respect of and which attached to that farming land.[30]
[30]Mr Mahon’s also gave evidence that, after the unbundling of water and land rights, there was no regime in place to inform farmers of the changed arrangements. He deposed that, after the unbundling, many if not most of the farmers for whom he acted or spoke to were not aware that water rights no longer ran with the land. Most of the criticisms advanced of this aspect of Mr Mahon’s evidence were without substance. However, this aspect of Mr Mahon’s evidence is fundamentally speculative and is contradicted by Alan’s activities in trading in water shares very soon after the unbundling occurred. I accordingly have not given this evidence any weight.
Parties’ submissions on construction
Jennifer’s submissions
Jennifer submitted that, pursuant to s 34 of the Wills Act, the will took effect at the date of the deceased’s death. At that time, the water shares were part of the deceased’s personal property. The plain and ordinary meaning of the words ‘my real estate at Pental Island … being the land’ in sub-cl 4(d) was to describe the deceased’s real property. Those words did not include the water shares because they were personal property which no longer had a necessary connection with the land. Because the deceased did not specifically gift the water shares, they formed part of the residue of her estate. The deceased could not have intended to gift the water shares to Alan because they did not exist when the will was made.
If the deceased had intended to leave Alan a working farm including water rights, Jennifer submitted that suitable words could have readily been included in the will; they were not.[31] Further, it was submitted that the deceased did not in fact gift absolutely everything relating to the caravan park and land; bank accounts used in the running of the farm or working capital were not included in the specific gifts made to him by cl 4 of the will.
[31]Such as, ‘I give to my son… all that is appurtenant to the operation of the property is a farm’.
Jennifer also submitted that Alan and the deceased had a poor relationship (and that she had a good relationship with the deceased) and that this prevented an inference being drawn that the deceased intended to gift the whole ‘kit and caboodle’ to Alan. This characterisation of the nature of Alan’s relationship with the deceased was said to be supported by: (i) Jennifer’s evidence that, in conversations with the deceased over the years, the deceased described Alan as ‘angry, cranky, a bully, a coward, and a woman hater’; (ii) the contents of a diary entry made by the deceased on 27 September 1997, the day she moved off the land;[32] and (iii) an incident shortly before the deceased died when Alan said to her with a raised voice ‘you should have transferred the farm to me a long time ago’, in response to which the deceased appeared shocked.
[32]The diary extract was, ‘I left PI loaded up to the hilt – without [Alan] saying goodbye to me. Stayed at Boys Street, tired out & sad. After almost 20 yrs of hard slog & no thanks’.
Jennifer rejected the suggestion that the deceased intended to leave Alan the water because the land was dependent on water. Jennifer relied on the fact that the land was financially dependent on the caravan park business which used only about 3% of the water rights and pointed to the fact that the land could be sold without the water rights. Alan could buy water shares at any time.
Jennifer submitted that the extrinsic evidence did not support an inference that the deceased intended to leave the water shares to Alan. The evidence in relation to the August 1997 meeting indicates that no agreement was reached then, or thereafter, that the water rights associated with the land would be gifted to Alan after the deceased’s death. The topic of water was not mentioned and there was no evidence that the deceased regarded water as important, or had the view that the land was dependent on it. More generally, Jennifer questioned the relevance of what occurred at the meeting, given that it occurred six years before the will was executed; the deceased could have based her testamentary instructions expressed in the will on different facts or matters.
Instead, Jennifer submitted that the surrounding circumstances in fact supported the proposition that the deceased did not intend to leave the water to Alan. The following matters were said to support a conclusion that, if the deceased had turned her mind to the issue of the water rights at any time, it is more likely that she would have favoured Jennifer over Alan.
(a) The deceased’s involvement in the water trades indicates a sophisticated, intelligent and organised woman. The capacity to engage in the water trades was the result of a process that altered the way in which water was regulated, which process occurred over the period of four or five years and involved about 20 meetings. It was submitted that this permitted the Court to infer that the deceased knew that the water rights were a transferrable asset separate to the land.
(b) Despite knowing that water had become a separate asset in 2007, the deceased did not change her will in the ensuing 10 years before her death.
(c) The deceased had a good relationship with Jennifer and a poor relationship with Alan.[33] Jennifer also referred to the significant financial benefits which Alan received from the deceased in 1997,[34] his pursuit of his own financial interests[35] and that he ‘pushed aside’ a request to help fund the deceased’s aged care support.[36]
(d) With the removal of the obligation in the 1995 will for Alan to pay Jennifer $100,000, it made sense that the deceased would organise her assets to favour Jennifer.
[33]See [51].
[34] See [41]–[42].
[35]By successfully seeking to extinguish the obligation on him in the 1995 will to pay Jennifer $100,000 (see at [40]) and by seeking equity in the land (see at [36]).
[36]See [46] above.
Jennifer submitted that, because the surrounding circumstances do not support an intention by the deceased to leave the water rights to Alan and because there is evidence in the surrounding circumstances that the deceased did not intend to leave the water rights to him, there is insufficient evidence for the Court to go beyond the plain and ordinary meaning of the words of the will to identify a ‘necessary inference’ or ‘necessary implication’, based on a ‘probability… so strong’, that the deceased intended Alan to inherit the water rights.[37] The Court should not go beyond the words used in the will ‘given the paucity of evidence in support of reinterpreting the clear meaning of the words that came into effect at the date of death’. It was submitted that there was no evidence in the will or elsewhere which indicated that the deceased intended her will to take effect from any date other than the date of her death.[38]
[37]See the words of Isaacs J in Fell v Fell (n 13) referred to above.
[38]Wills Act 1997 sub-s 34(2).
Jennifer argued that the will cannot be construed on the basis that the deceased’s assets did not change after the date of execution of the will, when they in fact did. It is the responsibility of a testator to update their will during their lifetime. Here the gap between the execution of the will and the date of death was significant.
Jennifer submitted that the decision of White J of the Supreme Court of New South Wales in Martin v Martin (Martin)[39] concerned facts which were relevantly indistinguishable from the present matter and should be followed.[40] In that case, the deceased by his will left to his son his ‘rural property known as Narooma’, all livestock, farm plant and equipment, and his farm business bank account, leaving the residue of his estate to his wife. After the execution of the will, but prior to the deceased’s death, the deceased was issued with a water access licence that could be dealt with independently of the Narooma land.
[39][2010] NSWSC 700 (‘Martin’).
[40]It was also submitted that there was no material difference between the legal regulatory regime in respect of water in that case and that established by the Water Act 1989 in this case.
Justice White held that the water access licence was not part of ‘my rural property known as Narooma’ and instead formed part of the residue. After referring to the equivalent provision to s 34 of the Wills Act,[41] White J concluded that the will spoke from immediately before the testator’s death because the terms of the will did not express a contrary intention.[42] His Honour analysed the situation as follows:[43]
Nonetheless, the question is not simply whether the deceased would have intended the access licence to pass to the plaintiff had he known and been able to appreciate that a new species of property had come into existence after he made his will, which was connected with the property and would enhance its value. Rather the question is what the deceased intended by the words he used. If the position is considered at the time of the will, for the reasons I have given, the deceased is not to be taken to have intended then that his rights to the water licence would pass to the plaintiff under the will, because those rights, even if considered as an asset, were not transmissible by will but rather would attach to a gift of the property by force of statute. If considered at the date of the testator’s death, it is hard to say that the access licence was part of the property known as Narooma when it was personal property which no longer had a necessary connection with the land. …
It is not a legitimate process of construction to ask what the testator would have intended had he been able to turn his mind and had turned his mind to the question as to how the property which came into existence after the will was to be disposed of. Rather the question is (considering the matter at the time of the testator’s death) what he intended to be denoted by the expression in ‘my rural property known as “Narooma”’. …
The difficulty with concluding that because it appears from the will that the testator intended to leave the farm and things appurtenant to it to the plaintiff, his reference to the property should be taken to include a reference to his interest in the access licence, is that after July 2004 the access licence was not appurtenant to the land.
[41]Probate and Administration Act 1898 (NSW) s 21 which stated: ’Every will shall be construed with reference to the real and personal estate comprised in it, to speak and take effect as if it had been made immediately before the death of the testator, unless a contrary intention appears by the will’.
[42]Martin (n 39) [41].
[43]Martin (n 39) [43]–[45].
Jennifer also relied upon a decision of the Supreme Court of Western Australia in Graham v Klenk in which it was ruled that a gift of ‘all plant and machinery’ was not to be construed as extending ‘to the farming business as a whole’.[44]
[44]Graham v Klenk [2017] WASC 342, [9].
Alan’s Submissions
It was submitted on behalf of Alan that the four categories of property described in sub-cls 4(a)-(d) of the will make plain that the deceased intended to dispose of to him the entirety of the property which comprised the farm and the caravan park on the land; what counsel for Alan described as the entire ‘kit and caboodle’. The evidence of the surrounding circumstances established that sub-cls 4(a)-(d) of the will represented the totality of the commercial undertakings carried out on the land. The absence of any reference in the provisions to bank accounts held by the deceased simply reflected the fact that there were no such bank accounts. This was unsurprising; the will was made in 2003, six years after the deceased stopped carrying on the caravan park and living on the land.
Alan submitted that it was unsurprising that the will did not contain any reference to water rights given that, when it was made, the common law water rights could not be separated from the land. Those rights operated as an appurtenance to the land and ran with the land. Accordingly, in devising to Alan her ‘real estate’, the deceased not only gave Alan the land, but the bundle of property rights which ran with it, including the water rights. Contrary to Jennifer’s submissions, it was therefore unnecessary to include in the will any words indicating that the real estate included appurtenants to the land.
In construing the will, Alan emphasised that it was made in circumstances where the land abutted the Murray River and where, given the unavailability of town water, the farm and the caravan park were wholly dependent on the river for water and could not function without the legal right to use water from the Murray River. In those circumstances, the deceased could not be taken to have intended for those water rights to be owned by a person other than the member of the family operating the farm in the caravan park.
In support of his preferred construction of the will, Alan also relied upon Mr Mahon’s evidence referred to in [48] above. He contended that the deceased’s will accorded with standard practice adopted by Mr Mahon in his legal practice over many years in the district in which the will was drawn and made.
It was submitted that the above interpretation was supported by what occurred at the August 1997 meeting. Alan made three key points about this meeting. First, water was not mentioned at the meeting and, more generally, there was no evidence that the deceased ever spoke about water rights. This confirmed the assumption that, consistent with the nature of the property rights when the will was executed, the water ran with the land. There was no need to speak about something which was a given. In circumstances where access to water was necessary for the farm and caravan park to operate successfully and where the only sources of water for those purposes were from the river and from rainfall, a conclusion that the water rights formed part of the deceased’s gift of real estate to Alan was submitted to be so obvious as to go without saying.
Secondly, it was submitted that the key issue was not whether or not agreement was reached between Alan and Jennifer in relation to what was to occur with the deceased’s assets after her death, but what those present, most notably including the deceased, understood to be the assets which were the subject of discussion concerning succession arrangements. The parties perceived that what was being divided between Alan and Jennifer was, on the one hand, all of the property rights associated with the land and the businesses conducted on it and, on the other, the deceased’s personal property.
Thirdly, it was submitted to be significant that, at a meeting at which the deceased was present and which was held for the purpose of addressing succession arrangements, an agreement was reached whereby Jennifer would not make a claim on the farm and the caravan park and Alan would not make a claim on the house and investments. This was said to evidence an agreement that, after the deceased’s death, Alan would receive the farm and the caravan park and what went with them, and Jennifer would receive the residue including the deceased’s investment properties and money in the bank. Important context to this agreement was the fact that the only available water for use or consumption on the land was rainfall and water from the river. By necessity, the common law riparian water rights meant that the water also went with the farm.
It was submitted that the above agreement was later reflected in the terms of the deceased’s will made some six years later because nothing changed in that intervening period. There was no evidence that anything occurred in the intervening period to alter what was agreed in the August 1997 meeting.
Alan submitted that it was ‘business as usual’ despite the unbundling of the deceased’s land ownership from her ownership of water rights in 2007. Occasioned by a high dependence on water from the Murray River, the farm and the caravan park continued to be carried on as if the two sets of rights were inextricably linked. There was no evidence that the deceased received legal advice after the unbundling to the effect that her will did not thereafter dispose of her property in accordance with her intentions and that the water shares would instead pass to Jennifer. Neither was there any evidence that, after the unbundling, the deceased told Alan that he would not be receiving the water shares, or that the deceased told Jennifer that she would be receiving the water shares. Alan submitted that it is highly improbable that the deceased would not have disclosed to any person such a significant departure from her intention expressed in her will given: (i) that Jennifer lived in Melbourne and had little or any involvement with the farm after 1997; (ii) that Alan and Mary lived on the land and operated the farm and the caravan park; and (iii) the nature and characteristics of the land and water availability.
As to the water trades, Alan submitted that the evidence demonstrated that, although the deceased ‘notionally’ traded in water, in reality it was he who engaged in the water trades. His actions in placing the relevant documents in front of the deceased and saying, in effect, ‘sign here’, in circumstances where he was the person operating the farming and caravan park, could not be said to have consciously operated to fix in the deceased’s mind an appreciation or understanding that the land did not include the water shares.
Alan emphasised the absence of any evidence by Jennifer of any conversations she had with the deceased about water. There was no evidence, for example, which revealed any understanding by the deceased that there had been a change in law which affected the nature of property in water rights, or any recognition or intention by her of wanting to change her testamentary wishes in light of the 2007 amendments to the Water Act 1989.
It was submitted that the effect of Jennifer’s submissions was that the deceased had behaved in a ‘Machiavellian’ way because, on Jennifer’s case, having made the will in 2003 and later becoming aware that the water no longer ran with the land, the deceased deliberately chose not to amend her will. It was submitted that there was no evidence that the deceased had such a ‘cunning plan’ and that the evidence about the August 1997 meeting pointed in the other direction.
Alan submitted that, given the benefit received by Jennifer from the deceased referred to in [43] above, the disposition of the deceased’s estate in accordance with the terms of the will construed consistently with the case advanced on his behalf was equitable.
In addressing Jennifer’s submission that the deceased could not have intended to have gifted the water shares because they did not exist at the time she made the will, Alan relied on the principles of ademption by way of analogy. Reference was made to the statement by the High Court in Brown v Heffer that ‘[a]demption 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.[45] In citing this passage in Re Blake, J Forrest J stated that:[46]
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.[47] Ademption does not occur where the subject matter of the gift has changed in name or form only, yet is substantially the same thing.[48]
[45]Brown v Heffer (1967) 116 CLR 344, 341 (citations omitted).
[46]Re Blake (2009) 25 VR 27, 35.
[47]Durrant v Friend (1852) 5 De G & Sm 343.
[48]McBride v Hudson (1962) 107 CLR 604, 613; Pohlner v Pfeiffer (1963) 112 CLR 52, 79.
It was submitted that, according to the principles of ademption, if a gift is substantially the same thing, but has changed in name and form only, then the subject matter of the gift remains and the gift continues to exist. The ‘subject matter’ was said to mean the topic dealt with, or the subject represented in, a ‘debate’. In the circumstances of this case, the subject matter for debate was water itself, not its legal characterisation. It was submitted that, in ascertaining the deceased’s intention, ademption applies by analogy and informs the Court’s task in interpreting the will.
In reliance on these principles, Alan submitted that, although the unbundling of the property rights in 2007 meant that the common law riparian rights which attached as an appurtenance to the land when the will was made no longer existed when the deceased died in 2017, the subject matter of the gift made by the deceased, the water, still existed and was owned by the deceased as at the date of her death. Whether the water was a common law right, or a statutory right, it was the subject matter of the gift made by sub-cl 4(d) of the will. Although the gift had changed in form from a gift of common law rights attached to the land, to a statutory right which existed independently of the land, it remained in substance the same – the water.
It was submitted that this was not a situation where, after the amendments to the Water Act 1989 in 2007, the deceased held an asset that she did not previously hold. The unbundling of property rights effected by the amendments only changed the characterisation of the water rights and did not alter the nature of the dispositions effected by the will. Further, this is not a case where the deceased had completely divested herself of ‘the water’ in her lifetime so that at her death there was nothing in her estate which substantially answered the words of the gift.
As to s 34 of the Wills Act, Alan submitted that a contrary intention appeared to the general provision made by sub-s (1) that a will ‘takes effect, with respect to the property disposed of by the will, as if it had been executed immediately before the death of the testator’. That contrary intention was said to be apparent from the circumstances surrounding the making of the will and the absence of any evidence that the deceased knew or understood the legal effect of the unbundling. Accordingly, it was submitted that the property disposed of by the will does not take effect as if the will had been executed immediately before the deceased’s death.
Counsel submitted that Martin was distinguishable on two bases and should not be followed. First, the statutory regime in respect of water was said to be fundamentally different to the regime established by the Water Act 1989. In particular, whereas under the New South Wales legislative framework, ownership of water was dependent upon occupation of the land, there is no such requirement under the Water Act 1989.
Secondly, it was submitted that, because of different statutory regimes relating to the construction of wills, the scope of the interpretative task undertaken in respect of the will in Martin was narrower than the scope of the interpretative task to be undertaken in this proceeding. It was submitted that there was no exact analogue to s 36 of the Wills Act in the relevant New South Wales legislation and the equivalent to s 34 of the Wills Act was materially different.[49] These differences meant that, unlike in this matter, the Court in Martin was not permitted to look at surrounding circumstances in construing the will and was constrained in the interpretative task to the four corners of the will.
[49]Section 21 of the Wills, Probate and Administration Act 1898 (NSW) provided that: ‘Every will shall be construed with reference to the real and personal estate comprised in it, to speak and take effect as if it had been executed immediately before the death of the testator, unless a contrary intention appears by the will’. In contrast, sub-s 34(2) the Wills Act 1997 provides that the provision made by sub-s 34(1) does not apply if a contrary intention appears ‘whether in the will or elsewhere’ (my emphasis).
Consideration
It emerged from the parties’ closing submissions that a key issue in determining the proper construction of the will was whether, pursuant to sub-s 34(1) of the Wills Act, the will took effect, with respect to the property disposed of by it, as if it had been executed immediately before the deceased’s death, or whether a contrary intention appeared ‘in the will or elsewhere’.[50] If the former general position applies, the deceased’s will took effect with respect to property including the water shares, which shares formed part of the deceased’s personal property and which were separate and distinct to the land. In this way, the application of sub-s 34(1) of the Wills Act was central to the construction case advanced on behalf of Jennifer.
[50]Wills Act 1997 sub-s 34(2).
A leading authority on the approach to determining whether there is a contrary intention for the purposes of sub-s 34(2) of the Wills Act is the judgment of Joyce J in Evans v Powell.[51] The question for determination in that case was the effect of a gift expressed as the ‘house and effects known as Cross Villa situated in Templeton in the county of Pembroke’. When the testator made the will, he was entitled to half an acre of land with a house upon it known as Cross Villa in which he resided. Some years later, the testator separated part of the land by a hedge and erected two dwellings and moved into one of them; those dwellings ceased to be known as Cross Villa. He later died. The controversy was whether the portion of the land separated by the hedge with two new houses upon it passed as part of the gift described as the ‘house and effects known as Cross Villa situated in Templeton’.
[51](1909) 1 Ch 784.
Justice Joyce concluded that the devise passed the property with all the buildings erected upon it. His Honour referred to s 24 of the Wills Act 1837 (the equivalent to s 34 of the Wills Act)[52] and the statement by Lindley LJ in In re Portal and Lamb that s 24 ‘does not say that we are to construe whatever a man says in his will as if it were made on the day of his death’.[53] Instead, Joyce J observed that, in construing a will it is necessary to ‘take into consideration the condition of things in reference to which it was made’.[54] He continued:[55]
It is well settled that there may be such a specific description of the subject of a gift as to shew that what was intended to pass, whether real or personal estate, was some particular thing in existence at the date of the will. When, however, the description is generic, as “all my lands in the county of X.,” the subject of the devise being capable of increase or diminution, all the testator’s lands in the county of X. at the date of his death will pass; and where there is such a particularity in the description of the subject of a gift as to shew that it was some object in existence at the date of the will that was intended to pass, it is considered that there is sufficient evidence of a contrary intention to exclude the application of the provisions of s. 24.
[52]Section 24 of the Wills Act 1837, 1 Vict, c 26 provided that: ‘[e]very will shall be construed, with reference to the real estate and personal estate comprised in it, to speak and take effect as if it had been executed immediately before the death of the testator, unless a contrary intention shall appear by the will’.
[53](1885) 30 Ch D 55.
[54]Evans v Powell (n 51) 786.
[55]Ibid.
In applying this approach, Joyce J concluded that the description in the will of the house known as Cross Villa was so particular and precise as to exclude the operation of s 24. It followed that ‘any building erected, though subsequently, upon land devised by the will must pass by the devise of the land’.[56]
[56]Ibid.
This analysis was referred to with approval by Dixon CJ in McBride v Hudson[57] in the context of determining what was required for the appearance of a contrary intention for the purposes of s 27 of the Wills Act 1936 (SA) (the equivalent to s 34 of the Wills Act).[58] His Honour stated that, ‘[i]f the bequest in question is seen to be specific it suffices as an indication of a contrary intention’.[59] Justice Windeyer likewise determined that a gift of specific property is itself an indication of a contrary intention.[60]
[57](n 48) 617.
[58]Section 27 of the Wills Act 1936 (SA) provided that ‘[e]very will shall be construed with reference to the real estate and personal estate comprised in it to speak and take effect as if it had been executed immediately before the death of the testator unless a contrary intention appears by the will’.
[59]McBride v Hudson (n 48) 616.
[60]McBride v Hudson (n 48) 629–30.
The devise effected by sub-cl 4(d) is specific and particular. It is the deceased’s ‘real estate at Pental Island being Allotment 7 in the Parish of Pental Island County of Tatchera and being the land comprised in Crown Grant Volume 9429 Folio 754’. As such, applying the above principles, it is clear that a contrary intention appears from the will with the consequence that it does not take effect, with respect to the property disposed of by it, as if it had been executed immediately before the deceased’s death.
This distinguishes the present matter from the circumstances considered in Martin. In that case, the testator’s gift was of ‘my property known as Narooma’. Justice White observed, ‘if the deceased had acquired additional lands or sold some of the lands forming Narooma between the date of his will and the date of death, the gift would operate in respect of whatever was the property known as Narooma at his death’.[61] It was on this basis that his Honour concluded that the provision made by the will was not a sufficiently specific bequest to express a contrary intention. The opposite conclusion follows in this case because of the specific terms of the devise made by sub-cl 4(d).
[61]Martin (n 39) [41].
Martin is also distinguishable because White J’s analysis was a product of a materially different statutory framework. Unlike in this case, when the testator in Martin made his will, he already held a water licence issued under the relevant legislation which provided that a licence could only be held for the benefit of the occupier of land. Thus the plaintiff, as the inheritor of Narooma, would obtain the benefit of the licence, ‘[b]ut… not … because the licence was property transmitted by will, but because, through the operation of ss 16 and 17 of the Water Act, the plaintiff would be deemed to be the holder of the licence and entitled to the benefit of the licence through his ownership and occupation of Narooma’.[62] Therefore, in considering the position at the time the will was made, White J concluded that ‘the deceased is not to be taken to have intended then that his rights to the water licence would pass to the plaintiff under the will, because those rights, even if considered as an asset, were not transmissible by will but rather would attach to a gift of the property by force of statute’.[63] These features of the statutory framework in Martin are absent from this case.
[62]Martin (n 39) [40].
[63]Martin (n 39) [43].
Once it is recognised that the deceased’s will did not take effect, with respect to the property disposed of by it, as if it had been executed immediately before her death, the construction of sub-cl 4(d) is clear. It means that, in respect of the water shares, the will is not to be understood as taking effect as if it had been executed immediately before the deceased’s death. Instead, in relation to the property disposed of by the will, the will is to be considered as at the date the deceased made the will. At that time, the nature of the then subsisting common law riparian rights necessarily had the consequence that, in devising the land to Alan, the deceased can only be taken to have intended that those rights would also pass to Alan as they were appurtenant to the land. Put another way, a necessary implication from the deceased’s expressed intention to devise to Alan the ‘real estate’ on Pental Island was that she intended Alan to receive the common law riparian rights which went with the land.
Although those particular common law rights did not exist when the deceased died, the gift had not been adeemed. As J Forrest J stated in Re Blake ‘[a]demption does not occur where the subject matter of the gift has changed in name or form only, yet is substantially the same thing.[64] That is what has occurred in this case. Relevantly, the subject matter of the deceased’s gift was the riparian water rights appurtenant to the land. That subject matter continued to exist at the date of the deceased’s death in the form of the water shares, being a statutory, as distinct from common law, right. Although the form of the rights had changed by the time the deceased died, the common law and statutory rights were substantially the same thing; they permitted access to water from the Murray River.
[64]Re Blake (n 46) 35.
Counsel for Jennifer accepted that, when the will was made, the matters referred to in sub-cls 4(a)-(c) of the will may have comprised the totality of the commercial undertakings carried out on the land. It is clear that they were. I accept Alan’s submissions that those provisions of the will, together with sub-cl 4(d), evince an intention on behalf of the deceased that Alan was to receive all the property which comprised the farm and the caravan park on the land; the entire ‘kit and caboodle’ as it was put. The common law riparian water rights appurtenant to the land self-evidently formed part of those rights. Such a conclusion is entirely unsurprising given that the land abuts the Murray River and the successful operation of the farm and the caravan park is dependent upon access to water from the river. In those circumstances, I accept Alan’s submissions that the deceased could not be taken to have intended for the water rights to be owned by a person other than the person to be gifted the farm and the caravan park.
Given the nature of the subsisting property rights when the deceased made the will, it is unsurprising that there is no evidence that the deceased ever made mention of the water rights associated with the land either at, or before, the time she made the will. There was nothing to discuss. For the same reason, it was unnecessary for the will to include words indicating that the real estate included appurtenants to the land.
The fact that water was not mentioned at the August 1997 meeting, which had been convened in part to discuss the deceased’s succession arrangements, indicates that those present, including the deceased, proceeded on the assumption that the water ran with the land. This was consistent with the nature of the then subsisting property rights. Counsel for Jennifer accepted that it was unsurprising that the matter of water was not mentioned during the meeting and that there was no rational basis, given the then status of property rights in respect of water, for the deceased to have spoken about water rights at that time.
I have otherwise found the evidence as to what occurred at the August 1997 meeting to be of little assistance in determining the proper construction of the will. The meeting occurred some six years before the will was made. There is no evidence which connects what was discussed at the meeting with the execution of the will six years later. Further, the parties’ submissions about the meeting unduly focused upon what was said by Alan and Jennifer and what was agreed, or not agreed, between them. It is difficult to see how evidence about those matters assists in construing the language used by the deceased when she made the will some six years later.
I have likewise found Jennifer’s various arguments based on the claim that she had a ‘good’ relationship with the deceased and that Alan had a ‘poor’ relationship with the deceased to be singularly unhelpful in determining the proper construction of the will. Extrinsic evidence admissible under sub-s 36(1)(c) of the Wills Act must bear upon the proper construction of the language used in the will. I do not consider that the various matters relied on by Jennifer said to demonstrate a qualitative difference in the relationship between the deceased and her two children – many of which were fundamentally speculative in any event – bear upon the meaning of the words used by the deceased in cl 4 of her will. Apparent affection and familial warmth between a testator and potential beneficiaries, or its absence, does not necessarily say anything about the testator’s testamentary intentions.
This was vividly illustrated by Jennifer’s unchallenged evidence that, in conversations with the deceased at various times over the last 30 years of her life, including in the years before she made the 1995 will, the deceased described Alan as ‘angry’, ‘cranky’, ‘a bully’, ‘a coward’ and ‘a woman hater’. However, despite this, under the 1995 will, the deceased expressed her intention to gift Alan the land, the farm, the farming plant and equipment and the shares in the company.
I do not consider that the fact that the deceased signed the water trades on four occasions between 2007 and 2009 bears upon the construction of the will made in 2003. As counsel for Jennifer accepted, the task is to construe the will by ascertaining the deceased’s testamentary intentions when she executed it. That intention must be the deceased’s intention ‘as expressed in her words in the will’,[65] not a claimed unexpressed intention asserted to be evident from certain conduct, such as the deceased’s actions in signing the water trades.
[65]Lutheran Church of Australia South Australia District Incorporated v Farmers’ Co-operative Executors and Trustees Ltd (n 11) 638 (Barwick CJ).
Jennifer’s reliance on the water trades also fails at an evidentiary level. Although the deceased may be taken to have understood that she was trading in water by signing the documentation to give effect to the trades, the proposition that she thereby appreciated that a fundamental change in the character of property rights in water had occurred which had implications for her previously expressed testamentary intentions is entirely speculative. The trades were prompted by Alan and were effected by the deceased signing documents at his request which he placed in front of her to sign. This occurred in circumstances where the deceased was no longer involved in operating the farm and caravan park and had been retired from the land for a decade or more. Alan’s evidence, which I accept, is that he never explained to the deceased that the ‘water existed separately from the land’.
For these reasons, properly construed, the reference to ‘my real estate at Pental Island’ in sub-cl 4(d) of the will includes the deceased’s water shares.
Disposition
The proceeding must accordingly be dismissed. Within seven days the parties are to submit a proposed minute of consent orders in respect of costs or, in the absence of agreement, written submissions on costs limited to five pages.
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