In the Estate of MARILYN SHIRLEY GRAHAM (DECEASED) - [2009] SASC 278

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
In the Estate of MARILYN SHIRLEY GRAHAM (DECEASED)
[2009] SASC 278
Judgment of The Honourable Justice Gray
4 September 2009
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - GENERALLY - GENERAL PRINCIPLES OF CONSTRUCTION - ASCERTAINMENT OF TESTATOR'S INTENTION AS EXPRESSED OR IMPLIED BY WORDS OF WILL
Application for advice and directions pursuant to section 69 of the Administration and Probate Act 1919 (SA) - construction of will of Marilyn Shirley Graham - clause 5 created testamentary trust for the benefit of husband of deceased - whether trust fund comprised both the remaining liquid assets and the home property - construction of phrase "cessation of independent living" - construction of "no longer requiring financial support" - duty on Public Trustee to ascertain these matters - factors to be considered by Public Trustee - powers of Public Trustee to sell home property under will and pursuant to statute.
Held: trust fund comprises both liquid assets and the home property - clause 5 of will provides Public Trustee with power to sell home and purchase alternative accommodation - sections 12 and 28 of the Trustee Act authorise Public Trustee to sell home and purchase alternative accommodation - entitlement of husband of deceased ceases at his death, the cessation of independent living, when no longer requiring financial support or on his written declaration - Public Trustee obliged to assess from time to time whether husband of deceased capable of independent living and his financial situation.

In the Estate of MARILYN SHIRLEY GRAHAM (DECEASED)
[2009] SASC 278
Testamentary Causes Jurisdiction
GRAY J.

This is an application for advice and directions pursuant to section 69 of the Administration and Probate Act 1919 (SA).
Introduction
Marilyn Shirley Graham died on 25 February 2004. She was survived by her husband Jack Richard Graham and her three adult children, Deborah Kay Browne, Karen Lisa O’Connell and Paul John Bethune. All were children of earlier marriages.
The deceased died leaving a Will dated 29 May 2003, appointing Peter Vardon Fairweather and Karen Lisa O’Connell as executors and trustees. Clause 5 of the Will constitutes a testamentary trust for the benefit of Mr Graham.
Probate was granted to Mr Fairweather on 15 July 2004 with leave reserved for Ms O’Connell to apply for probate as the alternate executor named in the Will. On 2 August 2006, Mr Fairweather retired from his position as trustee of the testamentary trust and appointed Ms O’Connell as the new trustee, pursuant to Part 5 of the Trustee Act 1936 (SA). On 4 January 2008, Public Trustee was appointed the new trustee of the testamentary trust by Ms O’Connell.
The difficulties leading to the application for directions relate to the proper construction of the Will, the terms of the testamentary trust created by the Will and Public Trustee’s obligations and powers as trustee.
The Testamentary Instrument
As noted, the Will established a testamentary trust for the benefit of Mr Graham. Clause…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: In the Estate of MARILYN SHIRLEY GRAHAM (DECEASED) [2009] SASC 278
Case: [2009] SASC 278
Decision Date: 4 September 2009

CaseChat Overview and Summary

In the matter of the Estate of Marilyn Shirley Graham, the deceased, the Public Trustee sought the court's advice on various issues related to the interpretation and implementation of the deceased's will. Specifically, the Public Trustee inquired about the composition of the trust fund established by clause 5 of the will, the criteria for terminating the trust's operation, the discretion of the Public Trustee to determine the deceased's husband's capacity for independent living and financial need, and the will's authorisation for the sale of the home property to acquire alternative accommodation. The court found that the trust fund encompasses all estate assets, including the home property, and that the trust's operation concludes upon the husband's death, cessation of independent living, lack of financial need, or written declaration. The Public Trustee has the discretion to decide if the husband is capable of independent living and in need of financial support, considering factors such as self-sufficiency, mobility, care requirements, and the adequacy of independent assets to cover accommodation and maintenance costs.

The court ruled that the phrase "no longer requiring financial support" signifies the cessation of the husband's entitlement under clause 5 if financial support is no longer necessary. The trustee must periodically assess the husband's financial situation to determine if he still requires support. If the husband has separate assets and income sufficient for adequate accommodation and maintenance, his entitlement under clause 5 would likely terminate. Clause 5 of the will grants the Public Trustee the authority to sell the home property and purchase alternative accommodation or enter into a suitable maintenance arrangement for the husband while he is capable of independent living. Furthermore, sections 12 and 28 of the Trustee Act empower the Trustee to sell the home property and acquire an alternative "dwelling-house" or establish an appropriate maintenance arrangement.

Orders

Orders of the court

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Background

Background to the litigation

As a consequence, Public Trustee sought the Court’s direction as to the composition of the trust fund created by clause 5 of the Will and in particular, whether the trust fund comprised all of the estate’s assets. Public Trustee further sought direction as to the factors upon which the operation of the trust fund would be terminated such that the residue would pass to the residuary beneficiaries, whether the Will grants Public Trustee the discretion to determine whether Mr Graham is capable of independent living and in need of financial support, what factors Public Trustee ought to take into account in exercising any such discretion and whether the Will permits Public Trustee to convert the home property in order to purchase alternative accommodation for Mr Graham. The Background Facts By statutory declaration dated 25 February 2009, Mr Graham deposed to his financial position. He is a recipient of a Service Pension from the Department of Veteran’s Affairs at the current single person rate of $1,124.20 per month. He has a sum of money invested which returns an income of approximately $90.00 per month. Mr Graham’s expenses include $60.00 per month for Meals on Wheels, approximately $40.00 per month for cleaning expenses and approximately $20.00 per month to cover day-to-day expenses. Ms Browne indicated that although she and Mr Bethune had no objection to Mr Graham being entitled to the use of the home property during his lifetime, they objected to any sale of that property or reduction of the value of the capital of the estate, for Mr Graham’s benefit. By affidavit dated 5 May 2009, Ms Browne outlined reasons for opposing any right of Public Trustee to deal with the estate of the deceased in such a manner as to diminish the corpus of the estate. Ms Browne deposed that the deceased and Mr Graham jointly purchased a property at Two Wells in 1987. That property was sold during January 2004, and the proceeds of sale were divided almost equally between the deceased and Mr Graham. The home property the subject of clause 5 was purchased on 21 November 1996. The deceased during her lifetime informed Ms Browne that Mr Graham made no financial contribution toward that purchase. Pursuant to a Deed of Assignment dated 21 November 1996, Mr Graham assigned the whole of his right to title and interest in the Contract for the purchase of the home property, to the deceased. Ms Browne submitted that it would not be proper for Public Trustee to invest the trusts of the estate of the deceased in such a manner that would cause a loss to the corpus of the estate. Further grounds for objection were outlined. Ms Browne claimed that Mr Graham had failed to disclose details of his personal assets to the deceased during her lifetime, but the deceased during her lifetime informed Ms Browne that Mr Graham had substantial assets and dealt with those assets in a manner that diminished his assets without benefiting the deceased. Ms Brown highlighted that Mr Graham deliberately abandoned his right, title and interest in the purchase of the home property, by the Deed of Assignment. Ms Browne further outlined that no authority was given in the Will to allow for the diminishing of the trust fund, and no authority or power of sale to authorise the sale of the home property. However, no satisfactory evidential basis for a finding that Mr Graham had assets beyond those he deposed to in his Statutory Declaration of 25 February 2009 was provided to the Court. Hearing of the MatterThe submissions of the parties

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GRAY J

These provisions apply whilst Mr Graham is capable of independent living. As outlined in clause 5, Mr Graham’s entitlements under the Will come to an end on his death, the cessation of independent living, or when he no longer requires financial support, or upon his written declaration.Conclusion Public Trustee has sought advice and direction of the Court on a number of matters:·The composition of the trust fund created by clause 5 of the will and in particular whether the trust fund comprises all of the assets of the estate. The trust fund comprises all of the assets of the estate, including the home property. ·The factors upon which operation of the trust fund shall be terminated such that the residue shall pass to the residuary beneficiaries. The entitlement of Mr Graham is to come to an end on his death or the cessation of independent living, or when no longer requiring financial support, or on his written declaration. ·Whether the Will grants Public Trustee the discretion to determine whether Mr Graham is:-Capable of independent living-In need of financial support·What factors Public Trustee ought to take into account in exercising any such discretion.-Whether the statutory declaration of Mr Graham constitutes sufficient basis for a determination that Mr Graham remains in need of financial support from the estate. Public Trustee is under a duty to assess from time to time whether Mr Graham is capable of independent living and whether he is in need of financial support. With respect to whether Mr Graham is capable of independent living, Public Trustee is to have regard to factors such as the degree of self-sufficiency of Mr Graham and the degree of his mobility, and in particular the degree of care or assistance required. In regard to whether Mr Graham remains in need of financial support, Public Trustee is to assess whether the independent assets of Mr Graham are sufficient to provide accommodation and maintenance at his own expense. As noted, absent matters that may raise concerns or put Public Trustee on enquiry, the statutory declaration provided by Mr Graham as to his financial position constitutes a sufficient basis for a determination that Mr Graham remains in need of financial support from the estate. · Whether the will permits Public Trustee to convert estate property, and in particular the Salisbury Downs property, in order to purchase alternative accommodation for Mr Graham. Clause 5 of the Will provides the Trustee with power to sell that property and purchase alternative accommodation or enter into a maintenance arrangement suitable for the needs of Mr Graham whilst he is capable of independent living. Additionally and in the alternative, sections 12 and 28 of the Trustee Act authorise the Trustee to sell the home property and purchase an alternative “dwelling-house” or enter into an appropriate maintenance arrangement.

Ratio Decidendi

Legal Principle Established

Established by: GRAY J

In relation to the phrase “no longer requiring financial support”, counsel agreed that Mr Graham’s entitlement under clause 5 ceases if financial support is no longer required. Counsel suggested that whether such support is required is a matter to be judged by the trustee as a matter of objective fact to be determined in the reasonable opinion of the trustee. The trustee would have a duty to make enquiries of Mr Graham from time to time to ascertain his financial position so as to satisfy itself whether or not Mr Graham requires financial support. It was accepted that if Mr Graham had separate assets, and income from those assets such that he could accommodate and maintain himself adequately at his own expense, this would arguably terminate any entitlement under clause 5. Consideration of the matter – the construction of clause 5 Clause 5 of the Will is poorly drafted. However it appears clear that the testator’s intention was to benefit Mr Graham during his lifetime, particularly by the provision of accommodation. The construction of clause 5 is to be considered having regard to this intent. The trust fund the subject of clause 5 comprises both the liquid assets and the home property. As excerpted above, the introductory words of clause 5 provide:I GIVE AND BEQUEATH an amount equal to my remaining liquid assets other than my home property and furnishings situated at 16 Empire Avenue Salisbury Downs in the State of South Australia which may be occupied by my husband on the basis described hereunder: (hereinafter referred to as “the Trust Fund” which expression includes all accumulations and accretions) unto my Trustees UPON TRUST… Arguably, the words “other than my home property” exclude the home property from the definition of the trust fund because those words operate by way of exception or qualification to the words which appear immediately before. However, when reading clause 5 as a whole, the home property clearly appears to form part of the trust fund in addition to the “remaining liquid assets”. The qualifying words “other than my home property…which may be occupied by my husband on the basis described hereunder” appear to be an expression of the testamentary intention to provide Mr Graham with the right of occupation of the home property, and that the trustee holds the home property as part of the trust fund subject to that right of occupation, which is more fully described later in clause 5. If the home property did not form part of the trust fund, it would form part of the “rest residue and remainder” of the estate of the deceased pursuant to clause 6 of the Will, and consequently be held by the trustees upon the trusts declared in clause 6 immediately for the three named adult children of the deceased. Having regard to the intention of the testator, as expressed in clause 5, to provide a right of occupation to Mr Graham in respect of the home property, the suggested construction should be rejected. Accordingly, it is only when Mr Graham’s right of occupation ends “upon his death or cessation of independent living or no longer requiring financial support or upon his written declaration that he no longer requires the benefit of the trust fund”, that “the balance of the Trust Fund…shall form part of [the] residuary estate”. Until the home property forms part of the residuary estate to be applied in accordance with clause 6, the home property forms part of the trust fund, which under clause 5 is conveyed to the trustees to hold on the trusts declared therein.