In the Estate of MARGARET WALTER SORRELL (DECEASED) - [2015] SASC 68

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
In the Estate of MARGARET WALTER SORRELL (DECEASED)
[2015] SASC 68
Reasons for Decision of The Honourable Justice Gray
5 May 2015
GIFTS - GIFTS INTER VIVOS - ESSENTIALS OF PERFECT GIFTS - GIFTS OF LAND OR INTERESTS THEREIN
REAL PROPERTY - TORRENS TITLE - UNREGISTERED INTERESTS - UNREGISTERED INSTRUMENTS - UNREGISTERED VOLUNTARY TRANSFER
SUCCESSION - MAKING OF A WILL - REVOCATION - METHODS OF REVOCATION - DESTRUCTION OR MUTILATION, OR STRIKING OUT PORTIONS - GENERALLY
SUCCESSION - MAKING OF A WILL - REVOCATION - METHODS OF REVOCATION - DEPENDENT RELATIVE REVOCATION - GENERALLY
Application for a declaration that there has been an effective gift of real property, and in the alternative, for a grant of letters of administration with a will annexed. The deceased died on 10 October 1986. In 1981, the deceased executed a will in which she appointed her nephew, the applicant, as an executor and trustee. By her will, the deceased made 24 small pecuniary bequests. The applicant and his sister were the residuary beneficiaries. As at the date of her death, the deceased was the registered proprietor of two properties, one each in Glenelg and Port Noarlunga South. In about February 1984, the deceased informed the applicant that she wanted to transfer the properties to the applicant to hold on trust for himself and his sister. The deceased executed the necessary transfer documents and provided the applicant with the certificates of title to the properties. The deceased then destroyed the 1981 will, telling the applicant that she no longer needed it. A mortgage was taken out over both properties with the ANZ Bank to finance a family property development venture. Following the deceased’s death, the applicant failed to register the transfers of the properties. The ANZ Bank foreclosed on the mortgage and sold the Glenelg property, leaving a surplus of funds, which were paid to ASIC. The applicant sought an order that the transfer of the Port Noarlunga South property into his name be registered and that he be paid the surplus funds from the sale of the Glenelg property; the funds and property to be held on trust for himself and his sister in equal shares.
Whether the transfers of the properties represented an effective inter vivos gift, notwithstanding the failure to register the transfers. Whether the deceased’s actions in destroying the will amounted to a conditional revocation.
Held (granting letters of administration with a copy will annexed):
1. The applicant has failed to establish that the deceased intended to effect an immediate gift of the properties to the applicant at the time of executing the transfer documents.
2. The deceased’s actions in destroying the will amounted to a conditional revocation. The deceased, having executed the memoranda of transfer, mistakenly believed she had obviated the need for a formal will.
Wills Act 1936 (SA) s 22, referred to.
Corin v Patton (1990) 169 CLR 540, considered.

In the Estate of MARGARET WALTER SORRELL (DECEASED)
[2015] SASC 68
Testamentary Causes Jurisdiction
GRAY J.

This is an application for a declaration that there has been an effective gift of real property, and in the alternative, for a grant of letters of administration with a will annexed.
On 10 December 2014, I made orders granting letters of administration with a copy will annexed. My reasons for doing so follow.
Background
Margaret Walter Sorrell, the deceased, died on 10 October 1986, aged 82 years. The deceased died a spinster without issue. The deceased was predeceased by her parents, her siblings and her half-siblings. Ralph Walter Sorrell, the applicant in the present proceedings, is the son of the deceased’s brother.
At the date of her death, the deceased was the registered proprietor of two properties, the deceased’s residence in Moseley Street, Glenelg, and a property in Port Noarlunga South. Both properties were mortgaged to the Australia and New Zealand Banking Group pursuant to registered mortgages.
The deceased executed a will on 15 July 1971. The deceased executed a subsequent will on 16 February 1981. Copies of each will were provided to the Court. Under the terms of the 1981 will, the deceased made 24 small pecuniary bequests. Mr Sorrell and his sister, Geraldine Margaret Koerner, were the residuary beneficiaries. Mr Sorrell was appointed as an executor and trustee of the deceased’s estate. The co-executor died before the deceased.
In an affidavit filed in support of the application, Mr Sorrell described his immediate family as having had a close relationship with the deceased. They had, for the most part, always lived in close proximity to the deceased and they had lived in the deceased’s home for 12 months in about 1955. As a child, Mr Sorrell had almost daily contact with the deceased. In about 1982, he travelled with the deceased to Italy for a period of three months on vacation. Mr Sorrell further deposed that he was very close to the deceased and that the deceased often confided in him. In 1979, the deceased gave Mr Sorrell her power of attorney. In 1983, the deceased again gave Mr Sorrell her power of attorney. It was a term of this appointment that the power of attorney was to continue in force until the death of the deceased.
Mr Sorrell deposed that, in about late 1983 or early 1984, the deceased was diagnosed with the early onset of Alzheimer’s disease. The deceased told Mr Sorrell that his uncle, Mr Sorrell’s mother’s brother, had advised her to transfer the Glenelg and Port Noarlunga South properties out of her name and to make arrangements for her future. In about February 1984, the deceased invited Mr Sorrell to her home to discuss the matter. The deceased produced the original and a copy of her will executed in 1981. She said that she wanted the Glenelg and Port Noarlunga South properties to be left to Mr Sorrell and his sister and wanted the properties transferred out of her name as soon as possible. At that time, Mr Sorrell’s sister was suffering from medical conditions arising from a major stroke. The deceased said that, as a result of Mr Sorrell’s sister’s condition, she did not believe that it was a good idea to transfer an interest in the properties directly to her. Instead, the deceased asked Mr Sorrell to arrange to transfer the properties into his name on the basis that he would hold them for his self as to one half and the other half for his sister, and failing that, her children. Mr Sorrell agreed to do so.
At that time, Mr Sorrell was a qualified and licensed land broker. He prepared the necessary transfer documents. On 13 March 1984, the deceased executed the transfers of the properties in the presence of Mr Sorrell and his mother. Copies of the executed transfers were tendered to the Court. The deceased also provided Mr Sorrell with the certificates of title of the properties, which he placed in his safe.
Mr Sorrell deposed that within about one week of the execution of the transfers, Mr Sorrell went to visit the deceased at her home. He noticed the original of the deceased’s 1981 will had been torn up into pieces and was in her fireplace. There was no fire burning. Mr Sorrell said, “Is this your will that you are destroying?” The deceased responded by saying words to the effect, “Yes – I don’t need it anymore. I have signed the transfers of my properties and you know what I want to happen.” Mr Sorrell further deposed that he has not seen the original of the will since that occasion but that he has since located a copy of the will.
Mr Sorrell deposed that the deceased and Mr Sorrell agreed that Mr Sorrell should try to acquire a property adjacent to the Moseley Street property in order to effect a development on the two allotments, for the benefit of the family. Funds were obtained for the development from ANZ Bank and secured by a mortgage granted in about October 1984 over the Glenelg and Port Noarlunga South properties. The mortgagor was the deceased, with Mr Sorrell signing the relevant documents as her attorney.
Mr Sorrell further deposed that, since about early 1980, it had been the desire of the deceased, Mr Sorrell and his mother that they purchase a property that would be large enough to enable them to live together with Mr Sorrell’s uncle, who died before the deceased. In addition to funding the development, the loan was also used to assist with the purchase of two other properties in Glenelg North. The registered proprietor of these two properties was Mr Sorrell’s mother, and it was intended that Mr Sorrell, his mother and the deceased would live together in one of the properties. Upon creation of the ANZ mortgage and when Mr Sorrell discussed the increasing size of the ANZ debt with the deceased, the deceased said words to the effect that, “the properties are yours now for you and Geraldine to do with them as you think best”.
As earlier noted, the deceased died on 10 October 1986. The Court was informed that, on her death, the deceased’s only assets were the two properties, as well as personal effects that were sold in order to reduce the mortgage debt.
Mr Sorrell deposed that he saw no need to take any action to transfer the properties until the deceased’s death as he had the executed transfers and also held the registered power of attorney of the deceased. Mr Sorrell overlooked the fact that the power of attorney had come to an end on the deceased’s death. Consequently, he had no authority to request production of the titles to the properties from the bank, or to otherwise handle the affairs of the deceased.
After the deceased’s death, Mr Sorrell had the transfers stamped and certified by Ms Dengate, a solicitor. Prior to the stamping and certification of the transfers, Ms Dengate interviewed the deceased and Mr Sorrell’s mother concerning the circumstances surrounding the transfers.
Mr Sorrell deposed that the failure of the development and the incurring of the debt to the bank, as well as the death of the deceased, sent him into a state of depression. He took no step to register the transfer of the deceased’s properties or to service the bank debt. Mr Sorrell was motivated not to register the transfers because a sequestration order had been made against his estate by the Federal Court on 4 October 1982, and he did not want to register the properties in his name while bankrupt. Mr Sorrell was discharged from bankruptcy on 4 October 1985, his creditors having been paid in full.
The development of the Moseley Street properties did not proceed. A high rate of interest was charged on the loan and a substantial debt was incurred with the bank. The bank foreclosed on the mortgage and sold the Glenelg property. After payment of the mortgage debt, there remained in credit with the bank in the account of the deceased funds of about $81,000.00. Mr Sorrell did not make a request to the bank for the delivery to him of the titles to the Glenelg and Port Noarlunga South properties.
Since the death of the deceased, Mr Sorrell has expended his own personal funds on the properties. The Court was provided with copies of invoices relating to the maintenance and upkeep of the properties totalling about $9,000.00.
Mr Sorrell sought orders that the Port Noarlunga South property be transferred to him, to be held by him on trust for himself and his sister in equal shares. He sought further orders that he and his sister be given the surplus funds relating to the sale of the Glenelg property.
When the proceeding was first called on for directions, the Court was informed that the surplus funds previously held by ANZ Bank following the sale of the Glenelg property had been transferred to ASIC to be held as unclaimed money. I directed that those funds, totalling $81,891.76, be recovered by the bank and deposited into Suitors Fund of the Court to the credit of the within proceeding. This deposit was made. I made further orders appointing a contradictor to appear on behalf of other persons that may have an interest in the deceased’s estate.
The Application
The application was initially advanced on the basis that the transfers of the Glenelg and Port Noarlunga South properties represented an effective inter vivos gift, notwithstanding the failure to register the transfers.
In Corin v Patton,[1] the High Court considered when equity will intervene to perfect an imperfect gift of land. Mason CJ and McHugh J said:[2]
... Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. “Necessary” used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.
[1] Corin v Patton (1990) 169 CLR 540.
[2] Corin v Patton (1990) 169 CLR 540, 559.
Mr Sorrell submitted that the deceased had done all that was required of her to effect the transfers as she had signed the memoranda of transfer, given the signed memoranda to Mr Sorrell, and given Mr Sorrell the titles to the properties. It was submitted that, by virtue of the power of attorney, there would have been no difficulty in Mr Sorrell obtaining the certificates of title from ANZ Bank, which would have permitted the transfers, subject to the mortgages. Accordingly, it was said that there was nothing to prevent the registration of the transfers and that the criteria for a perfected gift in equity had been met. It was contended that the applicant’s delay in seeking the registration of the transfers did not affect the gift or the right to registration.
A difficulty confronting the submission that there had been an effective inter vivos gift relates to the deceased’s conduct in entering the mortgages with ANZ Bank. While the mortgage documents were executed by Mr Sorrell, this was done in his capacity as attorney for the deceased, and the mortgage documents record the deceased as the mortgagor. The deceased’s conduct, through Mr Sorrell as her attorney, in entering the mortgages suggest that she was continuing to deal with the properties as though they remained her own. It is unclear how, if at all, the loan secured by the mortgages over the properties would affect the basis on which the deceased intended that Mr Sorrell would hold the two properties as trustee for himself and his sister in equal shares.
The deceased may have decided to register the mortgages in her own name because of Mr Sorrell’s bankruptcy. However, Mr Sorrell’s bankruptcy gives rise to another difficulty. Mr Sorrell was declared bankrupt on 4 October 1982, and remained bankrupt at the time that the deceased executed the transfers in March 1984. The execution of the memoranda of transfer occurred a few days before another property owned by Mr Sorrell was transferred to the Official Trustee in Bankruptcy on 19 March 1984. Consequently, it is likely that Mr Sorrell had in his contemplation the issue of whether he could lawfully receive a transfer of real property from the deceased while he remained an undischarged bankrupt. If Mr Sorrell did harbor such concerns, it is plausible that he discussed the issue with the deceased, with whom he was close. This raises the real possibility of whether the deceased gave consideration at the time to the possible difficulties or issues involved in transferring her real property to Mr Sorrell while he remained bankrupt.
Two possibilities suggest themselves. The deceased may, as Mr Sorrell now contends, have intended to effect an immediate gift of the two properties to Mr Sorrell to hold as trustee. Alternatively, the deceased may have executed the memoranda of transfer intending that Mr Sorrell would take the gift of the two properties only after he had been discharged from bankruptcy.
The reliability of Mr Sorrell’s recollection that the deceased said words to the effect, “the properties are yours now for you and Geraldine to do with them as you think best”, must be considered having regard to his medical condition and the significant elapse of time since the events in question. There appears to be some tension between this statement attributed to the deceased and Mr Sorrell’s assertion in an earlier affidavit that both he and the deceased considered the property development to be a family venture, and that the deceased was kept informed of all material events relating to the development.
On balance, I am not satisfied that the deceased intended to effect an immediate gift of the properties to Mr Sorrell at the time of executing the transfer documents. I consider that there is a real possibility that, as a result of Mr Sorrell’s status as an undischarged bankrupt, the deceased intended that Mr Sorrell would register the transfers only after he had been discharged from bankruptcy, and that the gift would take effect at that time.
In the alternative, in the event that the submissions regarding an equitable gift were rejected, Mr Sorrell sought a grant of letters of administration with the 1981 will annexed. It was contended that the deceased’s actions in destroying the 1981 will amounted to a conditional revocation and the condition was not satisfied. In particular, Mr Sorrell submitted that the deceased only destroyed her will because she believed that she had already disposed of her property in the manner that she wanted.
Section 22 of the Wills Act 1936 (SA) relevantly provides:
Subject to section 12(3), no will or codicil or any part of a will or codicil is revoked otherwise than—
…
(d)by the burning, tearing or otherwise destroying the will or codicil or the part of the will or codicil by the testator or by some person in the testator's presence and by the testator's direction with the intention of revoking it.
The authors of Williams on Wills make the following observations regarding conditional revocation of a will:[3]
Revocation by destruction, or obliteration, or by subsequent will or codicil, may be conditional, and if the condition in question is unfulfilled the revocation fails and the will, as made before such revocation, remains operative. … But the revocation of a will is prima facie absolute unless it is shown to be conditional, and the burden of proof lies on the person seeking to show that a revocation is conditional.
In all cases of revocation by destruction or obliteration, the question whether revocation is conditional is a question of fact, to be considered in connection with the circumstances in which revocation occurred and the declarations of the testator with which it may have been accompanied, which are accordingly admissible in evidence. A revocation grounded on an assumption of fact which is false takes effect unless, as a matter of construction, the revocation is conditional on the fact being true.
[Footnotes omitted.]
[3] Francis Barlow et al (eds), Williams on Wills (LexisNexis Butterworths, 9^th ed, 2008) [19.1].
In some cases, a revocation of a will founded on a mistake of fact or law by the testator may be inoperative. Again, in Williams on Wills, the law is summarised as follows:[4]
A revocation which is shown to be upon a mistake either of fact, or of law, and is considered by the court not to be intended by the testator except conditionally on the mistaken assumption being correct, is inoperative.
[Footnotes omitted.]
[4] Francis Barlow et al (eds), Williams on Wills (LexisNexis Butterworths, 9^th ed, 2008) [19.5].

In some instances, revocation of the will by the testator is interrelated to the making of another disposition or transaction. The topic of dependent relative revocation is discussed in Williams on Wills in the following terms:[5]
In particular, revocation may be relative to another disposition which has already been made or is intended to be made, and so dependent thereon that revocation is not intended unless that other disposition takes effect. Such a revocation is known as a dependent relative revocation, and if from any cause, the other disposition fails to take effect, the will remains operative as it was before the revocation. This conditional revocation must take effect. …
[Footnotes omitted.]
[5] Francis Barlow et al (eds), Williams on Wills (LexisNexis Butterworths, 9^th ed, 2008) [19.3].
The authors of Theobald on Wills summarise the law regarding conditional revocation by destruction as follows:[6]
If revocation was by destruction, whether the testator’s intention to revoke was absolute or conditional is a question of fact, which is decided upon all the evidence before the court. Evidence as to the testator’s declarations of intention is admissible.
[Footnotes omitted.]
The authors discuss the topic of revocation conditional upon the existence of a particular fact as follows:[7]
The application of the doctrine of conditional revocation is not confined to the instances already mentioned. The doctrine is of general application and applies if the testator destroys his will, intending to revoke it conditionally on the existence, or future existence, of a particular fact: if this condition is not satisfied the will is not revoked. But the doctrine is not applicable simply because the testator made a false assumption when he revoked his will. The true view is that a revocation grounded on an assumption of fact which is false takes effect unless the truth of the fact is the condition of the revocation, or, in other words, unless the revocation is contingent upon the fact being true.
[Footnotes omitted.]
As noted in this extract, a revocation does not have to be made according to an assumption about a presently existing fact. The revocation may be premised on the existence of a future fact.
[6] John G Ross Martyn et al, Theobald on Wills (Sweet & Maxwell, 17^th ed, 2010) [8.048].
[7] John G Ross Martyn et al, Theobald on Wills (Sweet & Maxwell, 17^th ed, 2010) [8.052].
As earlier noted, the scheme of the 1981 will was that the deceased made 24 separate pecuniary legacies before providing for Mr Sorrell and his sister as residuary beneficiaries. Accordingly, the deceased’s purported statement, after destroying her will, that, “I don’t need it anymore. I have signed the transfers of my properties and you know what I want to happen”, is problematic.
Notwithstanding this circumstance, I was satisfied that the deceased’s actions in destroying the will amounted to a conditional revocation. I reached this conclusion having regard to the evidence of Mr Sorrell regarding his discussions with the deceased. It appears likely that, having executed the memoranda of transfer, the deceased believed that she had obviated the need for a formal will. Although this left unresolved the question of the 24 pecuniary bequests made in the 1981 will, those bequests were relatively modest in size and it is possible that the deceased believed that she had substantially dealt with her estate as a result of the execution of the memoranda of transfer.
As earlier noted, the 1981 will appoints Mr Sorrell as an executor and trustee of the deceased’s estate and the other appointed executor and trustee is deceased. Mr Sorrell is 72 years of age and suffers from paranoia and schizophrenia. The administration of the deceased’s estate will give rise to some complexity as a result of the 24 individual pecuniary bequests. In these circumstances, it was submitted on behalf of Mr Sorrell that he would not be a suitable candidate to attend to administering the will and he did not seek such an appointment. Instead, it was suggested that the solicitor acting on his behalf, Harry Franklin Lambert, be appointed as administrator. It was evident that Mr Lambert had acted with an appropriate attention to detail in relation to this proceeding. I was satisfied that he would be an appropriate person to be appointed as administrator.
Conclusion
For the above reasons, I made orders on 10 December 2014 directing that letters of administration with a will annexed, as contained in a copy of the will dated 16 February 1981, of Margaret Walter Sorrell, be granted to Harry Franklin Lambert. I further ordered that the monies paid into the Suitors Fund of the Court be paid to Mr Lambert to pay therefrom the costs of the applicant and the contradictor as adjudged by a Master of the Court, and to hold the remaining balance as administrator of the estate of the deceased.