In the Estate of ISTVAN MOLNAR (DECEASED)
[2016] SASC 55
•5 May 2016
SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction: Civil)
In the Estate of ISTVAN MOLNAR (DECEASED)
[2016] SASC 55
Judgment of The Honourable Justice Stanley
5 May 2016
LIMITATION OF ACTIONS - EXTENSION OR POSTPONEMENT OF LIMITATION PERIODS - TRUSTS AND DECEASED ESTATES
LIMITATION OF ACTIONS - EXTENSION OR POSTPONEMENT OF LIMITATION PERIODS - GENERALLY - POWER OF COURT TO EXTEND LIMITATION PERIOD
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - ASCERTAINMENT OF TESTATOR'S INTENTION
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION - WHERE MISTAKE OR MISDESCRIPTION - AS TO PERSON OR OBJECT
Istvan Molnar (“the deceased”) died on 26 April 2012. Probate of the last will and testament of the deceased dated 22 September 2010 was granted on 5 August 2013 to three executors.
The application seeks rectification of the will. There are two issues on the application. First, whether the court should consent to an extension of time within which to bring the application. Second, whether the terms of the will accurately reflect the testamentary intention of the deceased. In particular, the issue is whether the deceased intended to confer a binding right on the applicant to an option to purchase a King William Street property or whether the provision is precatory, expressing a mere desire on the part of the deceased, not an intention to create a binding obligation or trust.
Held (per Stanley J):
1. There are adequate reasons to exercise the discretion in s 25AA(2) of the Wills Act 1936 (SA) and consent to the extension of time. Further, there is no particular prejudice arising from the bringing of the application out of time (at [39]).
2. There is clear and convincing evidence that the relevant clause of the will does not accurately reflect the actual testamentary intentions of the deceased. The will is to be rectified so as to give proper expression to those intentions (at [71]).
Wills Act 1936 (SA) s 25AA(1), s 25AA(2); Limitation of Actions Act 1936 (SA) s 47, s 48(3)(b)(ii), s 48(3b), s 48(4), referred to.
Kerr v Kerr [2015] SASC 199; In the Estate of Nies (deceased) [2014] SASC 93, applied.
Re Swain (deceased) [2008] NSWSC 1343, distinguished.
ANZ Trustees Ltd v Hamlet [2010] VSC 207; Rawack v Spicer [2002] NSWSC 849, discussed.
Re Adams and Kensington Vestry (1883) 24 Ch D 199; Adams and Kensington Vestry (1884) 27 Ch D 394; In Re Angas [1906] SALR 208; Re Atkinson (1911) 80 LJ Ch 370; Chittock v Stevens [2000] WTLR 643; In re Salmon [1981] Ch 167; Amos v Amos [1966] VR 442; Goodwin v Phillips (1908) 7 CLR 1; Ferdinands v Commissioner for Public Employment (2006) 225 CLR 130; Chittock v Stevens [2000] WTLR 643; In the Estate of Hennekam (deceased) (2009) 104 SASR 289; Sykes v Sykes [2010] SASC 356; Wesley v Wesley (1998) 71 SASR 1; Re Allsop [1968] Ch 39, considered.
In the Estate of ISTVAN MOLNAR (DECEASED)
[2016] SASC 55Testamentary Causes Jurisdiction
STANLEY J:
Introduction
This is an application for rectification of a will. The applicant seeks an extension of time within which to bring the application.
Background
Istvan Molnar (“the deceased”) died on 26 April 2012. Probate of the last will and testament of the deceased dated 22 September 2010 was granted on 5 August 2013 to the executors, David Botten, Trevor Robinson and Robert Lempens. Mr Lempens was the deceased’s solicitor and drafted the will. Clause 8 of the deceased’s will provides:[1]
[1] Exhibit P1, Annexure A.
8.I DIRECT that my company International Sound Pty Ltd (ACN 60 053 790 515) (“the company”) is to be wound up by my executors. I DIRECT THAT the proceeds therefrom should be held as follows:
(a) As to the proceeds of sale of the real property held by the company Lands Title Register Book volume 5579 folio 383 and situate at 304A King William Street Adelaide in the said State,
(i)The costs associated with the winding up of the company and sale of the property are to be paid
(ii)the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) be given to FRANK MICHOLON of 35 Marion Street Unley in the State of South Australia for repayment of any debt I or the company may owe to him.
(iii)Of the remaining amount
a.fifty percentum (50%) thereof to the said FRANK MICHOLON;
b.fifty percentum (50%) thereof to the residue of my estate;
(b) for the purposes of sub-clause (a) of clause 8. of this my Will I EXPRESS THE WISH that my executors give first option to buy the property described in Lands Title Register Book volume 5579 folio 383 to BENJAMIN MARKS BAKER at the current market value at the time of the sale as determined by a valuer appointed by the President of the Real Estate Institute of South Australia;
(c) and residual funds from the winding up of the company to form part of the residue of my estate
It is this clause which the application seeks to rectify. There is no issue that the clause incorrectly provides that the property situated at 304A King William Street (“the King William Street property”) was an asset of International Sound Pty Ltd (“the company”), a company effectively controlled by the deceased as its sole shareholder and director. In fact it was an asset of the deceased. In addition, the clause misspells the name of Mr Michelon. There are two issues on the application. First, whether the court should consent to an extension of time within which to bring the application. Second, whether the terms of clause 8 of the will accurately reflect the testamentary intention of the deceased. In particular, the issue is whether the deceased intended to confer a binding right on the applicant to an option to purchase the King William Street property or whether the provision is precatory, expressing a mere desire on the part of the deceased, not an intention to create a binding obligation or trust.[2]
[2] Re Adams and Kensington Vestry (1883) 24 Ch D 199; Adams and the Kensington Vestry(1884) 27 Ch D 394 at 410; Re Williams [1897] 2 Ch 12; In re Angas [1906] SALR 208; In re Atkinson (1911) 80 LJ Ch 370.
Benjamin Marks Baker (“the applicant”) first met the deceased in 1990. He became a frequent customer of the deceased’s business, the company. In about 1992 the deceased relocated this business to the King William Street property. In 1999, the applicant established a pawn broking business called King Pawn which was located in Stepney. During 1999 and 2000 the deceased was also a frequent customer of the applicant’s business. In 2001 the deceased purchased the King William Street property, which he had been leasing, for about $100,000. The purchase monies for this transaction were advanced to the deceased by his friend Frank Michelon. A mortgage was registered over the property. By deed dated 16 September 2002, the deceased also acknowledged that he held a one half share in the King William Street property on trust for Mr Michelon and that Mr Michelon would be entitled to receive one half of the net sale proceeds when the property was sold.
The applicant leased the King William Street property from the deceased and has operated his pawn broking business from this location since 2002.
The applicant submits that shortly thereafter he entered into an agreement with the deceased that he would meet all outgoings in relation to the King William Street property, including property maintenance costs, and, in consideration, the deceased would eventually sell the property to him at its market value, to be determined by valuation. In fact, the deceased did not sell the King William Street property to the applicant inter vivos. Instead, the applicant claims the deceased intended by his will to grant him a binding option to purchase the King William Street property at valuation after his death.
The applicant submits that clause 8 of the will contains errors which would defeat the deceased’s testamentary intention to provide him with that option.[3] In particular, the clause incorrectly identifies the company as the registered proprietor of the King William Street property when, in fact, it was owned by the deceased personally. It is submitted that as a result the clause is rendered inoperative causing the King William Street property to fall into the residual estate, and a sale of the property as part of the residual estate would not compel the executors to give the applicant the first option to purchase the property in the manner provided for by clause 8(b) of the will. Accordingly, by summons dated 8 October 2014, the applicant seeks an order pursuant to s 25AA(1) of the Wills Act 1936 (SA) (“the Act”) for rectification of clause 8 of the deceased’s will to give proper expression to the testamentary intentions of the deceased.
[3] See Exhibit P2 at [12].
On 8 May 2015, the Registrar of Probates directed that the summons be served on Mr Michelon and his wife, Lisa Michelon. Thereafter, Mr and Mrs Michelon entered an appearance as interested parties in these proceedings. Mr Ower, for the interested parties, submits that the applications ought to be refused, firstly, because no basis has been shown for an extension of time and, secondly, because, notwithstanding the error contained in the clause in relation to the ownership of the property, the evidence does not enable a finding that the testamentary intentions of the deceased were other than recorded in the unrectified will.
Following the death of the deceased, the applicant sought to exercise the option in clause 8(b) of the deceased’s will to purchase the property, however, the executors are not prepared to sell. They submit that there is a prior equity and contractual obligation in favour of the interested parties who do not agree to the sale to the applicant by private treaty at valuation. The executors take no position in relation to the applications before this Court but submit that rectification would be futile as it would not resolve the prior equity of the interested parties.
Pursuant to s 25AA(2) of the Act, except with the consent of the court, an application for an order for rectification must not be made more than six months after the grant of probate. Accordingly, the time for filing an application pursuant to s 25AA(1) of the Act expired on 5 February 2014. The summons in this action was not filed until 8 October 2014. As a result, the applicant also seeks an order pursuant to s 25AA(2) of the Act for consent to an extension of time in which to bring this application.
It is convenient to consider first the application for an extension of time in which to bring the application for rectification of the deceased’s will.
Extension of time: relevant principles
In identifying the principles relevant to the determination of an application for an extension of time pursuant to s 25AA(2) of the Act, a helpful starting point is the judgment in Chittock v Stevens.[4]In that case an application was made for leave to apply out of time for rectification of a will together with an application for rectification of that will. In the alternative, revocation of the grant of probate and pronouncement in favour of an earlier will was sought. Like s 25AA(2) of the Act, s 20(2) of the Administration of Justice Act 1982 (Eng), provided that a rectification claim, made after the expiration of a period of six months from the date of the grant of probate, could not be brought without the permission of the court. The court observed that there was no authority setting out the principles to be applied in considering an application for rectification of a will notwithstanding the elapse of six months from the date of probate. The court endorsed the approach taken in the case of In re Salmon[5] in relation to applications for extensions of time under s 4 of the Inheritance (Provision for Family & Dependents) Act 1975 (Eng) and found the guidelines set out therein capable of transposition to claims under s 20(2) of the Administration of Justice Act 1982 (Eng). The court adopted the following principles for determining an application for rectification of a will notwithstanding the expiration of the limitation period:
(1)the discretion is unfettered, to be exercised judicially and in accordance with what is just and proper;
(2)the burden is on the applicant to make out a substantial case that it is just and proper that time be extended;
(3)it is material to consider how promptly and in what circumstances the applicant has sought permission after the expiration of the limitation period, looking at the whole of the circumstances, the reasons for the delay and how soon the claimant gave warning of the proposed action;
(4)the existence of negotiations is relevant;
(5)whether or not the estate has been distributed is relevant; and
(6)it is material to consider whether a refusal to extend time would leave the applicant without redress against any other person.[6]
[4] [2000] WTLR 643.
[5] [1981] Ch 167.
[6] [2000] WTLR 643 at 649.
The status of the last of these principles, however, was left unresolved.[7]
[7] [2000] WTLR 643 at 649-650.
These principles do not purport to constitute an exhaustive list of the factors relevant to the determination of applications for extensions of the time in which to bring rectification claims.
In Amos v Amos,[8] a Victorian case involving an application to extend the time within which an application could be made for further provision out of an estate, the court held that the knowledge or otherwise of the existence of a time limitation period by the applicant or their legal representatives is also a relevant consideration in determining applications for extensions of time.
[8] [1966] VR 442 at 444.
In Re Swain (deceased),[9] Young CJ in Eq expressed some misgivings about the approach adopted in Chittock v Stevens.[10]That case involved an application pursuant to an analogous provision in New South Wales for leave to bring an application for rectification of a codicil to a will after the elapse of the limitation period. The limitation period was 18 months from the death of the testator. The relevant test for extending the limitation period was whether the court was satisfied sufficient cause was shown for the failure to make the application for rectification within time. Young CJ said:[11]
I have very great doubt as to whether the test as to what is sufficient cause for a Family Provision Act application being late can just be read across into s 29A. The fact that we are dealing with a public document operating in rem is a very strong distinguishing factor. Again, as the High Court said in Sophron’s case, one must look to see what the legislature meant in this particular statute, and it seems to me in this particular statute the legislature was directing its mind to a fairly strict time limit for people to take advantage of the boon being given by the enactment of the section.
[9] [2008] NSWSC 1343.
[10] [2000] WTLR 643.
[11] [2008] NSWSC 1343 at [23].
Although in the result Young CJ extended the time for bringing the application, his Honour maintained his position that a more stringent test applies in determining applications for extensions of time for the bringing of applications for rectification than deciding whether to extend time for applications under family provision legislation.[12]
[12] [2008] NSWSC 1343 at [51].
While the Court would always give considerable weight to the views of Young CJ In Eq, it is important to recognise that s 25AA is a beneficial or remedial provision.[13] Section 25AA(2) should be given a wide construction consistent with the purpose or object of the section.[14] The enactment of s 25AA altered the common law so as to expand the powers of the court to rectify a will to properly reflect a testator’s actual testamentary intentions. Moreover, the terms of s 25AA(2) differ from the terms of the analogous provision considered in Re Swain. The provision in Re Swain required the court to be satisfied that sufficient cause was shown for the failure to bring the application within time while s 25AA(2) confers a broad, unfettered power to extend the time within which an application for rectification can be brought. That power must be exercised judicially. In my view, however, it would not be consistent with the purpose of the provision to adopt a narrow and stringent construction of the power conferred by s 25AA(2), although in exercising the power the court must give proper consideration to the underlying purpose of the limitation period which relates to the circumstances where it would be appropriate for the court to exercise the substantive power of rectification in the context of the administration of a deceased estate. In these circumstances, I am disposed to prefer the approach in Chittock v Stevens[15] notwithstanding the reservations expressed in Re Swain (deceased).[16]
[13] Kerr v Kerr [2015] SASC 199 at [26].
[14] In the Estate of Nies (deceased) [2014] SASC 93 at [32].
[15] [2000] WTLR 643.
[16] [2008] NSWSC 1343.
Extension of time: submissions and evidence
The application for rectification of the will in this case is approximately eight months out of time.
Mr Stevens, for the applicant, concedes that there have been delays in the commencement and prosecution of this action. He submits that the causes of the delay were a desire by the applicant to resolve this matter without resorting to legal proceedings; exchange of correspondence between the parties; the need to obtain valuations; indications by two of the three executors that the matter ought to be resolved in favour of the applicant; an impasse in relation to which party had the responsibility of bringing the application or seeking directions from the court; a direction by the Probate Registry not to serve the summons and attendant delays in the service of documents and listing of the matter; and the applicant’s solicitor’s lack of knowledge as to the limitation period. Mr Stevens submits that the executors have been on notice about the applicant’s claim since at least May of 2012. He submits that the applicant’s solicitor, Mr Starke, has taken responsibility for errors and omissions by him and his staff. He contends that there has been no prejudice to the executors or residual beneficiaries given the applicant continues to pay commercial rent to the estate. He says the only opposition is from the interested parties who do not have an immediate interest in the outcome of the application before this Court.
Mr Stevens also seeks to rely to some extent upon s 47 of the Limitation of Actions Act 1936 (SA) (“Limitation of Actions Act”) which provides that where any Act limits the time within which an action may be brought to a period of less than 12 months from the time the cause of action arises then, notwithstanding that limitation, an action may be brought at any time within a twelve month period. Mr Stevens also invites me to have regard to the factors set out in sections 48(3)(b)(ii) and 48(3b) of the Limitation of Actions Act, although he concedes that the summons was not endorsed with a statement to the effect that the applicant sought an extension of time pursuant to this section as is required by s 48(4). In this respect, Mr Stevens submits that the executors encouraged a belief in the applicant that they would sell the King William Street property to him and permitted him to undertake various renovations and improvements. It is convenient to deal with this particular submission at this point. I reject the submissions in relation to the Limitation of Actions Act. The Limitation of Actions Act is not applicable to this case. The summons was not filed within the 12 month period allowed by s 47. There is no basis to invoke s 47. More particularly, however, s 25AA is a specific power conferred to permit the court to extend the time within which to bring an application for rectification. The conferral of this power by the Parliament implicitly excludes the operation of the general power conferred by the Limitation of Actions Act to extend the time within which to bring an application for rectification.[17] The power to extend time conferred by s 25AA(2) is a power to be exercised by considerations specific to the Wills Act, and not by reference to the more general considerations relevant to the exercise of the powers conferred by the Limitation of Actions Act. Section 25AA is also a later enactment than sections 47 and 48 of the Limitation of Actions Act. The operation of s 25AA is inconsistent with the latter provisions for extending time. As they cannot stand together, the later provision must operate to the exclusion of the earlier enactment, at least insofar as it applies to applications for rectification of a will brought out of time.[18]
[17] Goodwin v Phillips [1908] HCA 55, (1908) 7 CLR 1 at 14.
[18] Ferdinands v Commissioner for Public Employment [2006] HCA 5 per Gleeson CJ at [4] and Gummow and Hayne JJ at [47] – [48], (2006) 225 CLR 130 at 133 – 134 and 145 – 146.
In opposing an extension of time, Mr Ower, for the interested parties, submits that the applicant’s solicitor was put on notice of the executors’ position that the will expressed a mere wish and did not create a binding right for the applicant to purchase the King William Street property, by no later than April of 2013. In all the circumstances, he submits that the delay is a lengthy one; no satisfactory explanation has been provided for that delay; and once the application was filed, there has been a complete and utter lack of promptitude in bringing the application on for hearing. Further, he submits that the estate has been substantially administered which is a factor weighing heavily against extending time.
As I have said, the executors have taken no position in relation either to the application for an extension of time or the application for rectification of the will. In relation to the issue of delay, Mr Riggall, for the executors, merely submits that the delay was not caused by the conduct of the executors and submits that in all the circumstances the conduct of the executors in not commencing legal proceedings to resolve the differences between the applicant and the interested parties was reasonable and appropriate.
Much of the evidence on the application for an extension of time was directed to the third consideration identified in Chittock v Stevens,[19] namely, how promptly and in what circumstances the applicant sought permission after the expiration of the limitation period, the reasons for the delay and the time within which the claimant gave warning of the proposed action.
Mr Starke
[19] [2000] WTLR 643 at 649.
David Starke, the applicant’s solicitor, gave evidence that he was first instructed in April of 2013, about a year after the death of the deceased and before probate had been granted. He said there was extensive correspondence between his office and the solicitors for the executors.[20] Meetings were convened to facilitate a resolution of the matter. Mr Starke gave evidence that it was always his expectation that the matter would resolve. He also gave evidence that his view was that the executors had the conduct of the estate and ought to take the appropriate action to bring the matter before the court if required. Eventually, though, Mr Starke formed the view that it was necessary to institute proceedings on behalf of the applicant. In about May of 2014 a summons and statement of claim were drafted and contact was made with the Probate Registry. At this point, the limitation period for the commencement of rectification proceedings had already expired. Further delays then occurred as a result of dealings with the Probate Registry.
[20] A bundle of correspondence was admitted as Exhibit P9.
Mr Starke gave evidence that from 8 October 2014 when the summons was eventually filed until 19 August 2015 another solicitor in his office was working on the matter and that for three or four months nothing happened before notification was received from the Probate Registry that the matter was to come on before Gray J. Mr Starke was unsure of the cause of this delay. Mr Starke gave evidence that during this period he maintained contact and corresponded with the executors and the interested parties in an attempt to advance procedural issues and to resolve the matter generally.
In cross-examination, Mr Starke conceded that it was not until sometime after the expiration of the limitation period for the commencement of rectification proceedings that he became aware of the existence of the limitation period. He gave evidence that he was first advised of the existence of the limitation period by counsel when he sought an opinion on the merits of the claim.[21] That opinion was subsequently provided on 8 June 2014. When asked why it took from some time prior to June of 2014, when he became aware of the limitation period, until 5 August of 2014, when a statement of claim was lodged, to prepare and file the necessary documents including a request for an extension of time, Mr Starke responded that drafts were prepared which then needed to be settled by counsel. He said he appreciated that these documents needed to be prepared with some urgency but they also needed to be drafted correctly.
[21] T 87.
Mr Starke conceded that he did not contact the firm representing the interested parties but gave evidence that it was his view that it was for the executors to do this. Mr Starke accepted that he did not communicate this view to the executors notwithstanding that the executors wrote to him expressing their view that it was the role of the applicant to do so. When asked why all of this was not done with greater urgency, Mr Starke’s response was that in August of 2014 he underwent hip replacement surgery which required extended rehabilitation and that prior to this he was “… almost in a wheelchair …”.[22]
[22] T 92.37 - 92.38.
Mr Starke gave evidence that he was advised by the Civil Registry that the documents lodged on 5 August 2014 needed to be lodged in the Probate Registry. The documents were filed in October of 2014. Mr Starke said that he would have expected to have served the documents after filing them and for a date for a directions hearing to have been generated but his staff member advised him that the Probate Registry had given an oral direction not to serve the documents. Mr Starke testified that, notwithstanding this, he provided a copy of the documents to the other parties under cover of letter. On 29 October 2014 the Registrar provided his firm with a memorandum requiring the provision of an affidavit identifying persons adversely affected by the application together with their consents, and seeking further information and evidence relating to the merits of the application and the extension of time sought. Mr Starke agreed he did not comply with the request for information in the Registrar’s memorandum.[23] It was not until 19 August 2015 that the Registrar of Probates ordered that the summons be formally served.[24] When asked what steps he took between October 2014 and July 2015 to have the matter brought on for directions, Mr Starke gave evidence that he personally took no steps but he was aware of at least two occasions on which his staff made contact with the Probate Registry, although he could not say who the staff member was and no file notes of these attendances upon the Probate Registry appear to have been made. Mr Starke agreed that at least by late July 2015 he understood that it was his responsibility to have the matter brought on before the court but gave evidence that at around this time he was still finalising the preparation of the applicant’s affidavit. Mr Starke maintained that it was not possible to have undertaken this work much earlier. Mr Starke denied the proposition that from the time he was advised of the time limitation period, which was some time prior to June 2014, this matter was conducted by his firm with a complete and utter lack of urgency and diligence.
[23] T 96.
[24] Exhibit P8.
On the basis of Mr Starke’s evidence I am prepared to find that the events occurred as he described them. I do not accept, however, that his conduct of this matter reflects the diligence and urgency which the matter required. While I find that there were mitigating factors, such as the problem with his hip which required surgery, and that for some time he endeavoured to resolve the matter by negotiation in order to save time and costs, ultimately, I find there has been a lengthy and inordinate delay in bringing and prosecuting the application, for which there is not a wholly satisfactory explanation.
Mr Baker
The applicant gave evidence that the executors were put on notice of his claim to be entitled to purchase the King William Street property in accordance with the terms of the deceased’s will as early as May 2012. This was corroborated by Mr Botten and Mr Robinson. The applicant gave evidence that he was concerned about delays and made inquiries with Mr Starke about the progress of his claim. He said he was aware of issues with the Probate Registry, of delays in responses to correspondence between the parties, and of both Mr Starke and Mr Lempens undergoing medical procedures. The applicant gave evidence that because he lacked legal expertise and was unfamiliar with the manner in which matters such as these unfold, he trusted and relied on Mr Starke. He said he instructed Mr Starke “... basically to do whatever he needed to do to bring this matter on.”[25] He said he had some heated conversations with Mr Starke because he was frustrated by the delays and described what occurred as “... a perfect storm of delays ...”.[26] I accept this evidence.
Mr Lempens
[25] T 64.22 - 64.23.
[26] T 63.2.
Mr Lempens also gave evidence about the exchange of correspondence between the parties and his hope that the matter would be resolved without the need for legal proceedings. Further, he gave evidence about the deadlock that developed as to how the matter ought to proceed and who was responsible for obtaining directions from the court. This evidence was uncontentious and I have no difficulty in accepting it.
Extension of time: consideration
I accept Mr Starke’s evidence that he did not become aware of the existence of the limitation period until an opinion of counsel was sought, which was subsequently provided on 8 June 2014. Mr Ower concedes that this is a relevant consideration but contends that, even if I am minded to extend time based upon Mr Starke’s ignorance of the limitation period, the subsequent conduct of the matter ought to weigh against the granting of an extension of time given the lack of urgency with which the matter has been commenced and prosecuted. He says that upon being alerted to the expiration of the limitation period Mr Starke ought to have “... moved heaven and earth ...”[27] to have the matter brought before the court. Mr Ower complains that, instead, the evidence demonstrates that the matter has been conducted with a total and utter lack of urgency and diligence. I consider that this submission has some force.
[27] T 238.2 - 238.3.
I acknowledge the extenuating circumstances that Mr Stevens submits existed at various times prior to the hearing of this matter. However, I find that the criticisms made of Mr Starke’s conduct of this matter on behalf of the applicant are, to a significant extent, justified. Notwithstanding this, I am not prepared, in the circumstances of this case, to visit what appears to be the fault of the applicant’s solicitors upon the applicant. I accept the applicant’s evidence to the effect that he was frustrated by the delays in commencing and progressing his claim, and I am satisfied he was reasonably and properly diligent in pressing Mr Starke in relation to the matter, but ultimately he was reliant on his solicitor.
I am reinforced in my view that it is just and proper to extend time in the circumstances of this case because there has been no disposition of the King William Street property. The rationale for a limitation period of six months for the bringing of rectification claims lies, in part, in the risk that estates will have been administered and distributed. The Parliament has fixed the limitation period bearing in mind the difficulties associated with unwinding the distribution of an estate and the obvious hardship caused by subsequently recovering from beneficiaries their share of an estate distributed pursuant to an unrectified will. The evidence in this case is that the estate has been substantially administered but not fully distributed and distribution will not occur for a considerable period of time due to the age of two of the deceased’s grandchildren who, pursuant to the will, are to share the residue of the deceased’s estate upon their attaining thirty years of age.[28] Like Chittock v Stevens,[29] this is not a case where, if the application for rectification is successful, the court will have to unscramble the distribution of assets effected in accordance with the unrectified will. As the court observed in Chittock this removes what was characterised in In re Salmon[30] as a most important factor weighing against an extension of time.[31]
[28] T 265.
[29] [2000] WTLR 643 at 651-652.
[30] [1981] Ch 167.
[31] [2000] WTLR 643 at 651-652.
Further, I accept the evidence of both Mr Starke and Mr Lempens that there was extensive and ongoing communication between the parties in an attempt to resolve this matter without resorting to legal proceedings. Mr Stevens submits that as a matter of public policy parties ought to be allowed sufficient time, within reason, to try to settle disputes by way of agreement. The existence of substantial negotiations, commenced before the expiration of the limitation period, is also a factor weighing in favour of extending time in this matter.
In relation to the strength of the case for rectification and the burden on the applicant to make out a substantial case that it is just and proper that time be extended, Mr Ower submits that the application for an extension of time ought to be refused because of the lack of any clear and convincing proof that the testamentary intentions of the deceased are not reflected in the unrectified will. For reasons discussed later in these reasons, I am not prepared to find that the applicant has failed to discharge the burden of making out a substantial case to justify an extension of time.
Whether it is a material consideration in determining an application such as this, that the consequence of refusing an application to extend time would leave the applicant without redress, remains far from resolved. Mr Ower submits that whether the applicant may have a claim for damages against his solicitor is not a critical factor in this case but contends that the availability of alternative remedies is a relevant consideration weighing against the granting of the extension of time that is sought. In this regard he notes that it would seem from the statement of claim[32] that the applicant considers that he may have other causes of action against the executors. It may well be that the applicant has alternative remedies available to him, however, this is but one of the factors referred to in the authorities as relevant to the determination of the application before me. It is not a consideration which when weighed in the balance dissuades me from giving consent to bringing this application outside the limitation period. The factors in favour of giving consent to bringing this application, notwithstanding the expiry of the limitation period, are that the failure to bring the application within time is not the fault of the applicant personally, part of the explanation for the delay lies in the negotiations between the parties in an attempt to avoid the expense and time involved in litigating, the executors were warned of the applicant’s claim before the expiry of the limitation period, the property the subject of the application has not been sold by the executors, and for reasons to which I will now come, I am satisfied the application is not without substance.
[32] Exhibit M10.
I am satisfied that there are adequate reasons to exercise the discretion in s 25AA(2) of the Act and consent to the extension of time. Further, I do not consider that there is any particular prejudice arising from the bringing of this application out of time. In the circumstances I find that it is just and proper to extend time in this case.
Rectification: relevant principles
Section 25AA(1) of the Act provides:
(1) If the Court is satisfied that a will does not accurately reflect the testamentary intentions of a deceased person, the Court may order that the will be rectified so as to give proper expression to those intentions.
In In the Estate of Hennekam (deceased),[33] Gray J described the rectification power as a device to enable the court to correct a document which does not accurately reflect the testator’s intentions. It is generally concerned with rectifying mistakes as to the meaning or the contents of a will.[34] Gray J also considered the rectification power in the matter of Sykes v Sykes,[35] where his Honour observed that “... [t]he testator’s actual intentions are essential to found an order for rectification”.[36] The time for ascertaining the testator’s testamentary intentions is the time of making the will.[37] The testator’s testamentary intentions are to be determined from a consideration of all the circumstances surrounding the making of the will.[38]
[33] [2009] SASC 188, (2009) 104 SASR 289.
[34] [2009] SASC 188 at [36], (2009) 104 SASR 289 at 300.
[35] [2010] SASC 356.
[36] [2010] SASC 356 at [13].
[37] Wesley v Wesley [1998] SASC 7054; (1998) 71 SASR 1 at 5-6; Kerr v Kerr [2015] SASC 199 at [28].
[38] Kerr v Kerr [2015] SASC 199 at [32].
The nature and scope of the rectification power was considered in detail in In the Estate of Josef Bernhard Nies (deceased).[39]Gray J held that rectification would be ordered where it is necessary to ensure that the will reflects the testamentary intentions of the deceased.[40] His Honour remarked that the rectification power is a beneficial or remedial statutory provision designed to expand the previously circumscribed power of the court to correct errors in wills.[41] Accordingly, his Honour considered that a wider, rather than narrower construction of the s 25AA(1) would promote its purpose and, therefore, ought to be preferred.[42] Gray J said:[43]
It is a rule of construction that beneficial or remedial legislation is to be given “a fair, large and liberal interpretation” rather than one which is “literal or technical”, although a construction should not be given that is “unreasonable or unnatural”.
[Citation omitted].
[39] [2014] SASC 93.
[40] [2014] SASC 93 at [38].
[41] [2014] SASC 93 at [28] and [29].
[42] [2014] SASC 93 at [31].
[43] [2014] SASC 93 at [32].
Further, Gray J observed that s 25AA(1) contains no implication that the type of testamentary intentions capable of being the subject of an application for rectification ought to be limited.[44] Gray J said:[45]
The term “testamentary intentions” can be read in both broader and narrower senses. On the one hand, it is correct to say that a person’s testamentary intentions encompass the particular provisions that the person wishes to include in his or her will, for example, particular legacies or gifts that the person wishes to make, powers that the person wishes to confer, discretions given to trustees and the like. That is to say, the term “testamentary intentions” clearly encompasses matters of detail and the particular provisions by which a desired end is to be achieved or regulated. However, the expression should not be regarded as being so confined.
The term “testamentary intentions”, in my view, also properly refers to the broader ends or purposes or outcomes that the testator wishes to achieve by his or her will when described in a more general way, even if the testator has not turned his or her mind to the particular means by which that end, purpose or outcome is to be achieved or where the testator would need to rely on a skilled drafter to supply the words for the will necessary to achieve that end, purpose or outcome.
[44] [2014] SASC 93 at [35].
[45] [2014] SASC 93 at [36] - [37].
I adopt the broad, liberal construction given by Gray J to s 25AA(1).
A condition precedent to the exercise of the rectification power in s 25AA is the construction of the will the subject of the application. The reason for this is explained in ANZ Trustees Ltd v Hamlet[46] by Pagone J in considering the equivalent provision[47] in the Wills Act 1997 (Vic):[48]
… [I]t is a condition precedent to the exercise of the power in s 31 that the Court be satisfied that the Will does not carry out the testator’s intentions and that this satisfaction be based on one of two specified reasons namely, either that a clerical error was made or that the Will does not give effect to the testator’s instructions. The existence of the second of these conditions requires the Will to be construed and to be found upon its proper construction not to give effect to the instructions of the testator.
[46] [2010] VSC 207.
[47] Section 31 of the Wills Act 1997 (Vic).
[48] [2010] VSC 207 at [3].
In relation to the standard of proof in rectification applications, Debelle J remarked in Wesley v Wesley[49] that the principles enunciated by Dixon J, as he then was, in Briginshaw v Briginshaw[50] are applicable. In Rawack v Spicer,[51] which considered the rectification power in the analogous New South Wales legislation, Campbell J explained the rationale for this in the following terms:[52]
... The nature of the cause of action or defence, namely a claim to rectify the will of the deceased person, involves a situation closely analogous to that involving a claim against a deceased estate. Hence the factors which will lead a Court to take great care in evaluating the evidence concerning a claim against a deceased estate ... likewise apply to a claim for rectification. That granting rectification involves the Court in altering a document which will irrevocably change the destination of a deceased person's property after death, when the deceased has gone to the trouble of executing in a particularly formal fashion an instrument, often after receiving legal advice that the testator has paid for, is a serious subject matter. To allege that a testator, particularly when a will has been made in a formal fashion and with legal advice, has incorrectly stated, or unclearly stated, his or her intentions in that Will, is to allege a fairly grave matter - not as far advanced, in the spectrum of gravity of allegations, as an allegation of fraud, but still fairly grave. These considerations underlie some of the judicial statements about the standard of proof required before rectification of a will is granted ...
[Citation omitted].
[49] (1998) 71 SASR 1 at 5.
[50] (1938) 60 CLR 336 at 360-363.
[51] [2002] NSWSC 849.
[52] [2002] NSWSC 849 at [31].
Rawack v Spicer stands for the proposition that what is required to justify an order rectifying a will is “clear and convincing proof”[53] of the testator’s actual intention.
[53] [2002] NSWSC 849 at [31].
Construction of the will
The object of construction of the will is to discover the testamentary intentions of the deceased. In Re Allsop[54] Lord Denning MR said:[55]
… The object of the Court in construing a will is to discover the intention of the testator. I do not think his intention is to be discovered by looking at the literal meaning of the words alone. That has led … to the frustration of his intentions. You must look at the will in the light of the surrounding circumstances. Eschewing technical rules and literal interpretation, you must look to see simply to see what the testator intended. If you find that a literal interpretation gives rise to a capricious result which you are satisfied the testator can never have intended, then you should reject that interpretation and seek for a sensible interpretation which does accord with his intention.
[54] [1968] Ch 39.
[55] [1968] Ch 39 at 47.
The deceased’s will of 22 September 2010 by clause 8 provides for the winding up of the company by the executors and directs the executors to distribute the proceeds of the winding up, including the sale of the King William Street property, by payment of $100,000 to Frank Micholon [sic] with one half of the balance to be distributed to Mr Micholon [sic] and the other half to fall into the residue of the estate after the costs associated with the winding up and the sale of the King William Street property are paid. The will expresses a precatory wish that the executors give to the applicant the first option to buy the King William Street property at its current market value as determined by a valuer appointed by the President of the Real Estate Institute of South Australia.
The premise of clause 8 of the will is erroneous. The King William Street property was not an asset of the company. It was an asset of the deceased. It was owned by the deceased personally. I accept the submission of the applicant that unless the will is rectified to reflect the true position, the King William Street property will fall into the residual estate. As a result, without rectification, the operation of clause 8(b) of the will will be rendered void. A sale of the King William Street property as part of the residual estate would not be subject to the deceased’s testamentary intention concerning the applicant. At issue is whether that testamentary intention is accurately reflected in the precatory wish which finds literal expression in that subclause.
Rectification: evidence and submissions
I have had regard to the following affidavit and oral evidence directed to the application for rectification.
Mr Baker
The applicant deposed to a number of conversations between himself and the deceased in relation to the King William Street property in his second affidavit sworn on 27 August 2015.[56] The applicant said the deceased told him in 2001, prior to the preparation and execution of the lease for the King William Street property, that if he was prepared to cover all outgoings then the deceased would sell the property to him if and when a decision was made to sell it.[57] He said the deceased repeated this when the lease was executed in January of 2002.[58] The applicant said the deceased attended his business at the King William Street property between 2002 and 2005 on a monthly basis to collect rent and deliver invoices for outgoings, and that on these occasions the deceased would “...[t]ell me to deal with them because the Property was going to be mine one day anyway.”[59]
[56] Exhibit P2.
[57] Exhibit P2 at [27].
[58] Exhibit P2 at [30].
[59] Exhibit P2 at [31] and [32].
The applicant said that the deceased “... [o]rally confirmed ... that it was his intention to honour our agreement and to sell the Property to me”[60] in 2007 when the occupant of a neighbouring property offered to purchase the King William Street property from the deceased. He said that the deceased again confirmed the agreement in 2008 when a decision was made to continue the tenancy without a formal lease.[61] He said that between 2005 and 2010 he and the deceased frequently discussed the property “... [a]lways in the context of me ultimately owning the property”.[62] The applicant paid for electrical repairs at the property in May 2010 and termite damage repairs in September 2011, having been reassured by the deceased on each occasion that he would ultimately purchase the property pursuant to their agreement.[63] Importantly, he gave evidence that sometime in September of 2010 the deceased attended his business and produced his last will and testament, drawing the applicant’s attention to a clause which he said gave effect to their agreement.[64]
[60] Exhibit P2 at [36].
[61] Exhibit P2 at [37].
[62] Exhibit P2 at [39].
[63] Exhibit P2 at [42] and [44].
[64] Exhibit P2 at [43].
In cross-examination, the applicant had difficulty recalling the detail of specific conversations with the deceased in relation to the deceased’s will and the King William Street property. For example, when asked about the conversation in 2008 in which the applicant and the deceased decided that a formal lease was no longer necessary, the applicant gave evidence that nothing else was said during that conversation.[65] When he was taken to his affidavit and asked why he failed to tell the court that the deceased had also confirmed their agreement during this conversation, the applicant said he was nervous and it must have slipped his mind. Mr Ower put to the applicant that he was reconstructing the conversation with the deceased in relation to their purported agreement because he did not now have a specific memory of it. The applicant conceded that he could not now recall specifically what the deceased said to him about the property on that occasion but said that whenever they discussed the property the deceased always said to him “It’s going to be yours anyway”.[66]
[65] T 21.38 - 22.9.
[66] T 23.9.
The applicant gave evidence that the deceased first raised the agreement with him in 2001 when the deceased approached him to propose that he lease the King William Street property. It was his evidence that the deceased told him on this occasion that he would “... [c]onsider ...”[67] selling the property to him “... [i]f the arrangement worked out well ...”.[68] When he was then taken to his affidavit and asked why he failed to tell the court that the deceased had said that he “would” sell the property to him, the applicant again said that he was nervous. He said that he conversed with the deceased about this arrangement on at least a dozen occasions in 2001 but was not able to give evidence about the details of each of these conversations. The applicant gave evidence that he could not recall whether the agreement was discussed on the occasion of the execution of the lease in 2002. When taken to his affidavit, and the conversation on that occasion about the agreement relayed therein, he repeated that he was extremely nervous and said this was affecting his memory.[69]
[67] T 25.4.
[68] T 25.3 - 25.4.
[69] T 35.11 - 35.13.
The applicant also gave evidence about the occasion in 2010 when the deceased presented his will to the applicant. He said that the deceased came into his shop and put the will on the counter and that he read the page pertaining to him before thanking the deceased. He said that the deceased said that the page “... [r]elates to my agreement with you”.[70] The applicant could not explain why this statement does not appear in his affidavit. When taken to his affidavit, the applicant also conceded that there were inaccuracies about the conversation recorded therein. Further, he conceded that the reference in his affidavit to the deceased having used the expression “mortgagee” to describe the interested party, Mr Michelon, was also inaccurate.[71] At one point the applicant also gave evidence that he would have preferred for the agreement to have been reduced to writing but thought the deceased would have been offended had he suggested this.[72] When he was taken to his affidavit where he swore he “did” ask the deceased if the agreement could be reduced to writing,[73] the applicant could not explain this inconsistency.[74]
[70] T 57.27 - 57.28.
[71] T 41-42.
[72] T 37.
[73] Exhibit P2 at [30].
[74] T 38.
The applicant did give evidence, consistent with his affidavit, that he was reminded of the agreement every time he was presented with an abnormal expense one might usually expect a landlord to pay. He said the deceased would always say “because it’s going to be yours anyway”[75] and would often say that he would sell the property when he turned 70.[76] He also gave evidence about the discussion in 2007 in the context of an offer having been made to purchase the property and the deceased’s confirmation of the agreement.[77]
[75] T 37.8.
[76] T 37.12 - 37.13.
[77] T 39.
Mr Ower submits that the applicant’s evidence is inconsistent and unreliable. Mr Stevens concedes that the applicant was in large part unable to give evidence at the hearing consistent with his affidavits. He submits that, notwithstanding this, I ought to accept the applicant as a witness of truth. He contends that numerous conversations in relation to the agreement occurred over a significant period of time. He submits that I ought to find that the conversations deposed to by the applicant in his affidavit of 27 August 2015 did, in fact, occur.
Notwithstanding the legitimate criticisms that can be made of the applicant’s evidence, I am prepared to accept him as a witness of truth. I accept that he was very nervous and that this affected his ability to give evidence at the hearing. I am satisfied that a number of conversations did occur between the deceased and the applicant over a number of years in relation to an agreement between them that the King William Street property would be sold to the applicant. Some corroboration for these statements by the deceased is found in the evidence of Mr Robinson and Mr Botten. Further there was no challenge to the applicant’s evidence that he undertook capital expenditure on the property which would ordinarily have been the obligation of the landlord. I accept this evidence. It has some significance. It supports the applicant’s claim that he had an agreement with the deceased to purchase the King William Street property. In the end, however, whatever statements were made, and whatever agreement was made between the applicant and the deceased is of limited relevance. The issue is the deceased’s testamentary intention when he made his will of 22 September 2010. I will return to this later in these reasons but it suffices to observe at this stage that there is nothing in the evidence of the applicant concerning his dealings with the deceased relating to the King William Street property which is inconsistent with an intention on the part of the deceased to give the applicant the option to purchase the property as part of the disposition of his estate in his will and much to support it. In particular, I find that in 2010 the deceased attended at the King William Street property and showed the applicant the original or a copy of the will which referred to the applicant having a first option to buy the property at market value. I find that the deceased showed the applicant clause 8 of his will made 22 September 2010. I find that the deceased did so in order to reassure the applicant that upon his death, the applicant would have the right to purchase the property. I am satisfied the deceased wished to reassure the applicant that this was the case in order to keep faith with the applicant and the promises the deceased had made to the applicant over the many years he had been a tenant.
Mr Lempens
Mr Lempens is one of the three executors appointed by the deceased. He was also retained by the deceased to prepare his will. There is no reference to the applicant or to the granting of an option to the applicant to purchase the King William Street property in the notes compiled by Mr Lempens of instructions given to him by the deceased during an initial attendance on 9 July 2009.[78] No reference is made to the granting of such an option in either the contemporaneous[79] or settled[80] notes of instructions given to Mr Lempens by the deceased during his next attendance on 28 July 2010. Mr Lempens gave evidence that his usual practice is to record instructions given to him by clients about their testamentary intentions in relation to property in documents such as these. Mr Lempens said that he now has no independent recollection of the attendances. Mr Lempens agreed that it appears from his file that two drafts of the deceased’s will were prepared, neither of which referred to the applicant. There was no doubt however that he received instructions from the deceased in relation to the King William Street property and the applicant. With reference to the client ledger for the file,[81] Mr Lempens gave evidence that it was likely that instructions were received from the deceased in relation to the applicant on 22 September 2010 when the deceased attended and executed the will in its final form.[82] However, he said that his memory had not been refreshed about the nature of this attendance and that this was merely an inference he drew from the documents. Although the evidence is somewhat obscure in this respect, I find it probable that this was the case. There is no dispute that the deceased must have given instructions to his solicitors in relation to an option in favour of the applicant to purchase the King William Street property. At issue is the nature and terms of those instructions and his intention at the time.
[78] Exhibit P6, Annexure RL2.
[79] Exhibit M14.
[80] Exhibit M15.
[81] Exhibit M16.
[82] T 122.
Mr Lempens gave evidence that he uses the language “I express the wish” from time to time when drafting wills “when there’s a desire that the executors do something ... not that they have to do it but there’s a desire they do it.”[83] I find that Mr Lempens has decades of experience drafting wills and understands the distinction between granting a binding option to purchase and expressing a precatory wish. However, Mr Lempens gave evidence that he now has no independent recollection of the deceased using any particular form of words in relation to providing the applicant with an opportunity to purchase the property.[84] Mr Stevens put to Mr Lempens that it was he, as the draftsman of the deceased’s will, who chose to use the word “wish” in the relevant clause. Mr Lempens responded that “depending on what was said to us, we would have chosen the words to use”.[85] When asked to compare his affidavit sworn on 11 September 2015[86] with the notes[87] of instructions given to him by the deceased during his attendance on 28 July 2010, Mr Lempens conceded that his affidavit was inaccurate insofar as it claimed that the deceased told him that he “wished” to appoint three executors, that he “wished” to give a property at Glandore to one of his sons and he “wished” to make a number of other gifts.[88] Mr Lempens accepted that the notes[89] of the deceased’s instructions consistently use positive and definitive language. He could not recall what, if any, advice was given to the deceased about the effect of the use of the word “wish” in the relevant clause prior to the execution of the will.[90]
[83] T 107.7 - 107.9.
[84] T 125.
[85] T 125.23 - 125.24.
[86] Exhibit P6 at [7].
[87] Exhibit M15.
[88] T 126-128.
[89] Exhibit M15.
[90] T 148.
When asked to compare the deceased’s instruction recorded in the notes[91] that he wanted to be cremated in the cheapest possible way with clause 13 of the deceased’s will that he wished for this to occur, Mr Lempens said: “That would be how I would normally draft the clause in relation to disposal of the body because they just don’t want to be [sic] happening at the time when they die.”[92] In his closing submission Mr Riggall provided a sensible explanation for the drafting of clauses dealing with the disposal of bodies in this fashion, however, I consider that this belies the proposition that the language of the will reflects the testamentary intentions of the deceased. In any event, in my view the argument predicated on the notion that the language of the will represents the testamentary intentions of the deceased must fail because it assumes the answer to the very matter that is in issue in this case. Further, it assumes that the deceased was alert to the nuances of language used in the will and appreciated the differences between directing that something occur and expressing the wish that it occur, which I find highly improbable, especially given the fact that the imperative language used in the will varies considerably.[93] I am not persuaded that the consequences of the use of the phrase “I express the wish” in a will such as the deceased’s would be readily apparent to a lay person, such as I find the deceased to be, lacking a relatively sophisticated understanding of the law.
[91] Exhibit M15.
[92] T 174.33 - 174.35.
[93] For example, the clauses of the will variously refer to declaring, giving, directing and bequeathing.
Mr Lempens accepted that the relevant clause in the deceased’s will was drafted at a time when he had in his possession the information that the property was owned by the deceased personally and not by his company.[94] Notwithstanding this, it was drafted on the mistaken belief that the property was owned by the company. When asked whether he gave any consideration to what the effect of winding up the company would have been on the ability to control the disposal of the property if it was owned by the company, Mr Lempens gave evidence that he could not recall but “... [c]ertainly that is why you would make it a wish, one of the reasons to make it a wish ... because ... the company may owe other debts ...”[95] Mr Stevens submits that the language of expressing a wish may have been used as a consequence of Mr Lempens’ misapprehension in relation to the ownership of the property. A submission was also advanced by Mr Riggall and, in effect, adopted by Mr Ower, that this language may have been employed in order to take account of Mr Michelon’s prior equity. Mr Lempens gave evidence that this was possible.[96] These submissions are nothing more than speculation. In any event, I reject the latter submission given that it was Mr Lempens’ evidence that he did not know that there was a difference between the legal and beneficial ownership of the property until he received a copy of the deed in about March of 2013.[97]
Mr Robinson
[94] T 138.
[95] T 143.31 - 144.3.
[96] T 145.
[97] Exhibit P6 at [10] and [19].
Mr Robinson, another of the three executors appointed by the deceased, was a friend of the deceased. He gave evidence that he and the deceased had several conversations about his testamentary intentions and that, as a consequence of those conversations, he has no doubt about the deceased’s objectives in relation to the King William Street property. I accept his evidence that the deceased told him that his objective was for the applicant to have an option to purchase the King William Street property.[98] He said that the deceased wanted this and did not merely wish it.[99] He said that the deceased’s language in relation to the King William Street property did not differ from his language in relation to his other assets. He conceded that he could not recall the exact words the deceased used, however, he gave evidence that it would not have been characteristic for the deceased to have used a word like wish. He described the deceased as “... a pragmatic, definitive person...”[100] and a “... decisive individual”[101] who “... wasn’t given to qualification ...”[102]
[98] T 178.3 - 178.5.
[99] T 179.
[100] T 178.5.
[101] T 178.9.
[102] T 178.8.
Mr Robinson was not able to recall specifically when these conversations occurred. He could not recall the first time the deceased spoke to him about these matters nor whether it was before or after the deceased became unwell. Mr Robinson recalled that the deceased spoke to him about the property and his testamentary intentions in 2011 but when asked to provide details, including about the timing and location of those conversations, he said:[103]
... [t]hey were over the course of a number of occasions and we had - as I said, I am a fairly conceptual person and if I understand something and things are extraneous, I tend to forget what's extraneous, so [sic] the dates in this are highly meaningful to me, I would recall that. When Steve decided that these things needed to be done, he communicated them to me and we were together often enough for that to happen and be refined. It was likely it happened over a number of occasions, not one.
[103] T 184.22 - 184.31.
Mr Ower put to Mr Robinson that he had no specific memory of any conversations with the deceased about the property but Mr Robinson insisted that he had a “concept”,[104] as a result of multiple conversations, that the deceased wanted to give the applicant the opportunity to purchase the property. Pressed in cross-examination as to whether the deceased actually used the word “give”, Mr Robinson responded that he could not recall the deceased’s exact words. Mr Robinson consistently said in effect that he could recall “... [w]hat was said ...”[105] but not “... [t]he words that were used.”[106]
[104] T 185.
[105] T 190.16.
[106] T 190.17.
Mr Ower submits that Mr Robinson was unable to give any direct evidence from which an inference could be drawn that the deceased intended to grant the applicant a binding option to purchase the property.
I consider that it is perfectly understandable that witnesses may not be able to recall the detail of conversations which occurred many years ago. In fact, in many cases it would arouse suspicion if witnesses were to purport to recall the precise details of conversations which occurred many years earlier. I am satisfied that numerous conversations occurred over an extended period of time between Mr Robinson and the deceased in relation to the King William Street property and the deceased’s agreement with the applicant. I find that on numerous occasions the deceased expressed to Mr Robinson his intention that by his will he would grant to the applicant an option to purchase the King William Street property. I am satisfied he expressed this intention in imperative terms.
Mr Botten
Mr Botten, the third of the three executors, was also a friend of the deceased. In his affidavit sworn on 8 July 2015, Mr Botten deposed to a conversation in around January of 2002, at which he was present, between the deceased and the applicant, about the agreement in relation to the King William Street property.[107] Further, he said that the matter was raised sporadically with him by the deceased over the years.[108] In cross-examination, Mr Botten, like Mr Robinson, was not able to recall the precise details of conversations with the deceased about the property but was adamant that it was the deceased’s intention that the applicant have the first option to purchase the property. Mr Ower put to Mr Botten that he was reconstructing conversations with the deceased because he wanted to sell the property to the applicant and that his dislike of the interested party, Mr Michelon, was colouring his recollection. Mr Botten denied that this was the case.
[107] Exhibit P3 at [23].
[108] Exhibit P3 at [24].
Mr Ower criticises Mr Botten’s evidence as vague and urges me to reject as recent invention his evidence at trial in relation to a conversation before the 2002 conversation deposed to in his affidavit. He submits that Mr Botten’s evidence is infected by his antipathy towards Mr Michelon. I repeat the finding that I made above in relation to Mr Robinson’s inability to recall the detail of conversations which occurred many years ago. Further, for all the criticisms that might legitimately be levelled at the evidence of Mr Botten, I do not consider that he was dishonest. I accept his evidence as far as it goes. However, his evidence really goes to the question of the deceased’s intention to sell the property to the applicant inter vivos rather than his testamentary intention. Yet again there is nothing in his evidence which is inconsistent with a testamentary intention to grant an option to purchase the property to the applicant given that the property had not been sold during the deceased’s lifetime.
Rectification: consideration
On the basis of the foregoing, I am satisfied that the deceased intended at the time of the preparation of his will to grant the applicant a binding option to purchase the King William Street property. There is no record of instructions given by the deceased in relation to the relevant sub-clause and it is the evidence of Mr Lempens that he has no recollection of any discussions with the deceased in relation to the basis for the use of precatory language contained therein. I am not satisfied that the precatory language of clause 8(b) of the deceased’s will reflects his actual testamentary intentions. There is too much inconsistency in the notes made by Mr Lempens in taking instructions from the deceased to draw an inference as to the deceased’s intentions from the text of the will. Notwithstanding that the applicant has an immediate financial interest in the outcome of this action, I accept his evidence that in late 2010 the deceased showed him the original or a copy of his will and said that he would be given an opportunity to purchase the property. The evidence of Mr Robinson supports the finding that the deceased intended to grant the applicant a binding option. There is nothing inconsistent with the existence of such an intention in the evidence of Mr Botten. I consider that there is clear and convincing evidence in this matter that the relevant clause of the will does not accurately reflect the actual testamentary intentions of the deceased. Accordingly, I am prepared to order that the will be rectified so as to give proper expression to those intentions.
I reject the submission of Mr Ower that the court cannot be satisfied to the requisite degree that the deceased had a testamentary intention to confer a binding right to purchase the King William Street property on the applicant given the evidence of an oral agreement between the applicant and the deceased to sell the property to the applicant inter vivos when the deceased turned 70, given that, in fact, this did not occur. Although the evidence is not entirely clear, it appears that the deceased turned 70 at about the time he made his will. I accept that by this time, he had changed his mind about selling the King William Street property to the applicant on or about his 70th birthday. However, I am satisfied on the evidence that he did so in circumstances where he was making a will granting a binding option to the applicant to purchase the King William Street property at valuation.
While I understand the force of the submission made by Mr Riggall that granting the application may be of limited utility given that it will not achieve a complete resolution of the claims of all parties, the application before the court is an application for rectification and I am satisfied, to the extent that I must be, that it is appropriate to grant that application. The question of whether Mr Michelon’s prior equity is an impediment to the exercise of the applicant’s option to purchase the King William Street property was raised in the course of submissions but I was not asked to decide that matter. In my view, it is not open to me to conclude that rectification is futile on the basis it would not resolve the difficulty presented by the prior equity of Mr Michelon. Given the clear and convincing proof of the testamentary intention of the deceased that the applicant should have an option to purchase the King William Street property at valuation, I consider the proper course is to rectify the will to reflect the deceased’s actual testamentary intentions and the question of whether the prior equity is an obstacle to the exercise by the applicant of his option to purchase the King William Street property can be determined if he chooses to exercise the option. I also consider that it is appropriate, as submitted by Mr Stevens, to introduce commercial certainty into the deceased’s will.
Conclusions
The time for the making of this application for rectification is extended to 8 October 2014.
The deceased’s will is rectified substantially in the manner set out in annexure DAS-1 to the affidavit of Mr Starke sworn on 4 September 2015,[109] by substituting the following clauses for the existing clause 8:
[109] Exhibit P5, Annexure DAS-1.
8A.I DIRECT that my company International Sound Pty Ltd (ACN 60 053 790 515) (“the company”) is to be wound up by my executors. I DIRECT THAT:
8A.1 The costs of winding up International Sound Pty Ltd shall be paid by my estate.
8A.2 The proceeds therefrom be held on trust as part of the residue of my estate and for the trusts described in clause 9 below.
8.Subject to the conditions in this clause I DIRECT my executors to sell my property at 304A King William Street Adelaide in the said state being the whole of the land described Certificate of Title Volume 5579 Folio 383 (my King William Street property).
8.1 grant to BENJAMIN MARKS BAKER (Baker) the first right to purchase my King William Street property at the current market value at the time of the sale as determined by a licensed valuer appointed by the President of The Australian Property Institute, South Australia Division less any amount paid by Baker before or after the date of my death for the improvement or maintenance of my King William Street property.
8.2 I direct my executors to make application to the President of The Australian Property Institute, South Australia Division for the appointment of a licensed valuer within two months.
8.3 I direct my Executors to serve a copy of the valuation on Baker within 10 business days of its receipt by them together with a contract for the sale and purchase of my King William Street property. The terms and conditions of sale shall be those contained in the Law Society of South Australia Contract for the Sale and Purchase of Land. Baker may at any time within 20 business days of the date of service of the valuation give written notice to my Executors that exercise the right to purchase my King William Street property. Settlement and payment of the purchase price shall occur within 30 days of the date that Baker exercise the right to buy my King William Street property.
8.4 As to the proceeds of sale of my King William Street property I direct my Executors:
8.4.1 To pay the costs associated with the sale of my King William Street property.
8.4.2To discharge and pay the principal and any accrued or unpaid interest due pursuant to Memorandum of Mortgage No 9236582 in the name FRANK MICHELON and LISA ANN MICHELON both of 35 Marion Street Unley in the State of South Australia.
8.4.3 To pay fifty percentum (50%) of the net proceeds of sale of my King William Street property (calculated as the valuation price less the amounts in clause 8.1) to the said FRANK MICHELON and LISA ANN MICHELON.
8.4.4 To hold the balance of the net proceeds of sale of my King William Street property on trust as part of the residue of my estate and for the trusts described in clause 9 below.
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