IN THE ESTATE OF MUNCHENBERG (DECEASED)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
IN THE ESTATE OF MUNCHENBERG (DECEASED)
[2021] SASC 15
Decision of the Honourable Justice Bampton

SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION - READING WILL AS A WHOLE
Application for judicial advice or direction regarding the proper construction of a will — where the will gifts real property to be divided equally between four named beneficiaries — where one of the named beneficiaries predeceased the testator — whether the deceased named beneficiary’s children are entitled to the gift pursuant to the substitutional provision in the will.
HELD: Upon reading the will as a whole, the children of the deceased named beneficiary are entitled to the gift their father would have taken had he survived the survivorship period specified in the will.
Fell v Fell (1922) CLR 268; King v Perpetual Trustee Co Ltd (1955) 94 CLR 70; Marley v Rawlings [2014] 2 WLR 213; Boyes v Cook (1880) 14 Ch 53, applied.
Farrelly v Phillips & Ors (2017) 128 SASR 502; Perrin v Morgan [1943] AC 399, discussed.

IN THE ESTATE OF MUNCHENBERG (DECEASED)
[2021] SASC 15
Civil: Application

BAMPTON J: Brian Frederick Munchenberg (“Brian”) died on 21 July 2019, having never married or had children, leaving a will dated 25 September 2002. Brian appointed his de facto, Audrey Joyce Reichstein (“Audrey”), and the applicant, Kevin Raymond Madden (“Kevin”), the executors of his will. As Audrey died on 18 October 2011 probate was granted to Kevin, who was Brian’s accountant and advisor for many years, on 12 December 2019.
Kevin has deposed in an affidavit affirmed on 26 October 2020 (“the affidavit”) that he prepared mirror wills for Brian and Audrey and does not hold any records pertaining to the preparation of the wills. Kevin also deposed that as at the date Brian and Audrey made their wills they owned a house property at 11 Petch Street, Loxton (“the Loxton property”) as tenants in common.
Following Audrey’s death, her half-share in the Loxton property was, in accordance with her will, transferred to her children Alan Douglas Reichstein (“Alan”), Lloyd Frederick Reichstein (“Lloyd”), Terence Leo Reichstein (“Terence”) and Judith Leonie Pfitzer (“Judith”) in equal shares. Brian remained a registered proprietor of a half share and Alan, Lloyd, Terence and Judith were each recorded as registered proprietors of a one-eighth share in the Loxton property.
The application for advice or direction
Kevin has made application for advice or direction regarding the proper construction of Brian’s will (“the will”) supported by the affidavit.
By the will, Brian left his estate to his step-children Alan, Lloyd, Terence, and Judith.
Lloyd died on 28 December 2016, predeceasing Brian. The interested parties to the application are Lloyd’s three children, who are Brian’s step-grandchildren.
The Will
By clause 6 of the will, Brian gifted his share in the Loxton property as follows:
AS TO my share of the houses situated at 11 Petch Street Loxton to be divided equally between ALAN DOUGLAS REICHSTEIN and LLOYD FREDERICK REICHSTEIN and TERENCE LEO REICHSTEIN and JUDITH LEONIE PFITZER absolutely provided that they survive me by thirty (30) days. IN THE EVENT that one of them wishes to purchase my share of the said house situated at 11 Petch Street Loxton they shall have first option to buy it at council value.
Clause 10 provides for the residuary of Brian’s estate:
AS TO the remainder of my estate to the said ALAN DOUGLAS REICHSTEIN and LLOYD FREDERICK REICHSTEIN and TERENCE LEO REICHSTEIN and JUDITH LEONIE PFITZER to be divided equally between them absolutely provided that they shall survive me by thirty (30) days.
Clause 11 contains a substitutional gift to Brian’s step grandchildren providing that:
IN THE EVENT that ALAN DOUGLAS REICHSTEIN and LLOYD FREDERICK REICHSTEIN and TERENCE LEO REICHSTEIN and JUDITH LEONIE PFITZER shall die in my lifetime leaving a child or children surviving who shall have attained the or shall live to attain the age of twenty one (21) years then such child shall take and if more than one equally between them the share in my estate which his her or their parent would have taken if such parent had lived.
At the time Brian made the will, Audrey, Alan, Lloyd, Terence and Judith were alive. Lloyd’s three children were also alive, two of whom had attained the age of 21.
Kevin’s construction of the will
Kevin, as executor of the will, relying on Kourakis CJ’s comments in Farrelly v Phillips & Ors,[1] considers that Lloyd was not a beneficiary under clause 6 of the will as he predeceased Brian. Kevin has dealt with the gift of the Loxton property in clause 6 of the will (“the clause 6 gift”) as a gift to be shared between the surviving co-owners Alan, Terence, and Judith. Kevin deposed in the affidavit that he clearly recalls that Brian and Audrey each wished that their respective interests in the Loxton property pass to the surviving co-owners. Further, he deposed that Brian wished that the residue of his estate pass to the children of any beneficiary who predeceased him. Accordingly, Kevin has taken the view that Lloyd’s children are not entitled to take Lloyd’s benefit in clause 6 pursuant to the substitutional provision in clause 11 of the will.
[1] (2017) 128 SASR 502 at [14].
Lloyd’s children’s construction
Lloyd’s children dispute Kevin’s construction of clause 6 and contend that under clause 11 of the will they are entitled by substitution, as Lloyd predeceased Brian, to the clause 6 gift Lloyd would have taken had he not died during Brian’s lifetime.
Kevin’s affidavit
Kevin deposed in the affidavit that Brian’s assets have been realised and the proceeds have been paid to his solicitors’ trust account.
By reference to a confirmation of registration document, exhibit “E” to Kevin’s affidavit, the registered proprietors of the Loxton property at the date of Kevin’s death were: Kevin (four‑eighths share), Alan (one-eighth share), Mingay Rose Reichstein (“Mingay”) as executor of Lloyd’s estate (one-eighth share), Judith (one‑eighth share), and Terence (one‑eighth share).
Kevin stated in the affidavit that two of the co-owners of the Loxton property were interested in purchasing it and, as a result Judith purchased the interests in the house property that she did not already own. Kevin does not explain how Lloyd’s estate’s one-eighth share was purchased. By reference to a settlement statement in relation to the sale of the Loxton property, exhibit “F” to the affidavit, it is apparent that the government valuation for the property was $315,000. Therefore, Brian’s half share in the Loxton property was valued at $157,500 and a one eighth share was valued at $39,375. It appears, in accordance with Kevin’s construction of clause 6 of the will, that Brian’s share was divided equally between Alan, Terence, and Judith, such that they were each entitled to $52,500 for their share of the clause 6 gift following the sale of the Loxton property.
It appears that Judith bought the Loxton property for $315,000 less her pre‑existing one-eighth share valued at $39,375 and less her one third share in the clause 6 gift (according to Kevin’s construction) valued at $52,500. Accordingly, I infer that Judith paid:
·The sum of $91,875 (comprising $39,375 for their one-eighth share and $52,500 for their one-third share of the clause 6 gift) to each of Alan and Terence; and
·The sum of $39,375 to Mingay as the executor of Lloyd’s estate in respect of the one-eighth share owned by Lloyd’s estate.
Consideration
In construing the will, it is my task to discover the intentions of Brian and the scheme he conceived for the will. Brian’s intentions and the scheme are to be ascertained from an examination of the language of the will viewed as a whole.[2] This involves identifying the natural and ordinary meaning of words and sentences used in the will in the context of all provisions in the will. In this task, I can be aided only by “such facts as existed and were known to the testator at the date of the will” which are admissible in interpreting the language of the will, but subjective evidence of Brian’s intentions cannot be taken into account.[3]
[2] Fell v Fell (1922) CLR 268.
[3] King v Perpetual Trustee Co Ltd (1955) 94 CLR 70 at 78 and Marley v Rawlings [2014] 2 WLR 213 at [18]-[19].
In Perrin v Morgan, Lord Romer said:[4]
I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made.
Viscount Simon said:[5]
… [t]he fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case – what are the “expressed intentions” of the testator.
[4] [1943] AC 399 at 420.
[5] [1943] AC 399 at 406.
In my view, reading the will as whole, there is no ambiguity or lack of clarity in Brian’s expressed intentions and the scheme of the will. As such, it is not necessary to consider the admission of extrinsic evidence under the “armchair principle”.[6] I point out that Kevin’s evidence regarding his recollection of Brian’s wishes is inadmissible because it is subjective evidence of Brian’s testamentary intention.
[6] Boyes v Cook (1880) 14 Ch 53 at 56 (James LJ).
On my examination of the will, its scheme is to distribute Brian’s real and personal estate in equal shares between those of Alan, Lloyd, Terence, and Judith (“the named beneficiaries”) who survive Brian, and in the event any of them predecease him to the children of the predeceased named beneficiary.
Clause 6 gifts the Loxton property to the named beneficiaries in equal shares. It contains a survivorship provision requiring that the named beneficiaries must survive Brian by 30 days for their gift to accrue. It also provides that the named beneficiaries have first option to buy the Loxton property at council value.
Clause 10 contains the gift of the residue of Brian’s estate to the named beneficiaries in equal shares. It also contains a survivorship provision requiring that the named beneficiaries survive Brian by 30 days for their gift in the residue to accrue.
Clause 11 contains the substitutional gift which takes effect in the event a named beneficiary dies in Brian’s lifetime leaving a child or children aged 21 or who live to attain the age of 21. In the event a named beneficiary does not survive Brian by the required period of 30 days, then the child or children of that beneficiary who has, have, or will attain the age of 21 are the substitute beneficiary or beneficiaries of the gift their parent would have taken had he or she lived.
Kevin has adopted a different approach to each of clause 6 and clause 10. He submitted Brian intended by clause 6 that should one of the named beneficiaries not survive the survivorship period he or she was not a beneficiary of the clause 6 gift and the Loxton property is shared between those named beneficiaries who do survive. Kevin in effect has read into clause 6 an accrual provision which provides that the gift to the named beneficiary who did not survive the survivorship period is to be shared equally by the surviving named clause 6 beneficiaries.
Kevin has relied on the comments of Kourakis CJ in Farrelly v Phillips & Ors:[7]
(b)a named person, to whom a testamentary gift if made on condition that he survives the testatrix, is not a beneficiary if he or she did not survive the testatrix.
in support of his contention that Lloyd is not a beneficiary to the clause 6 gift. It must be noted the Chief Justice prefaced and confined his comments to the matters in issue in Farrelly v Phillips saying, “The question of construction in this case can be approached in this way”,[8] and did not go on to discuss the effect of failure of a gift to a named person who predeceases a testator. Lloyd is not a beneficiary under the will because he did not survive Brian. However, his death before Brian enlivened the substitutional provision in clause 11 such that upon Brian’s death Lloyd’s children (the substitutionary beneficiaries) subject to having attained the age of 21, take by substitution the gift Lloyd would have taken under the will had he not predeceased Brian.
[7] (2017) 128 SASR 502 at [14].
[8] (2017) 128 SASR 502 at [14] (Emphasis added).
Kevin’s approach to the construction of clause 10 is inconsistent to the approach he used to construe clause 6. Kevin is of the view that if a named beneficiary in clause 10 did not survive the survivorship period then the substitutional provision in clause 11 would be enlivened.
The difficulties raised by Kevin’s approach can be seen when the question is asked: what happens to the clause 6 gift if all the named beneficiaries in clause 6 do not survive the survivorship period? Applying Kevin’s reasoning, the gift fails and the substitutional provision in clause 11 is not enlivened. As such, the failed gift is not disposed of and passes on intestacy.[9] However, in my view, if any or all of the named beneficiaries did not survive the survivorship period, the substitutional provision in clause 11 would be enlivened.
[9] David M Haines QC, Construction of Wills in Australia (LexisNexis Butterworths, 2007), at 378 [40.2].
It is to be noted that the will refers to the named beneficiaries by name in clauses 6, 8,[10] 10, and 11. It does not create a class by referring to them, for example, as “my step-children” or “the children of my de facto Audrey”. If clauses 6 and 10 did create class gifts rather than gifts to named beneficiaries, should one of the class not survive the survivorship period then the surviving step‑children take the gift between them.[11]
[10] The houses the subject of clause 8 were sold by Brian during his lifetime.
[11] Farrelly v Phillips & Ors (2017) 128 SASR 502 at [53] (Stanley J).
Clearly, the clause 6 gift to the named beneficiary Lloyd did not accrue as he predeceased Brian. He is therefore not a beneficiary under the will. However, his death activated the substitutional provision in clause 11 in respect of the clause 6 gift of the Loxton property and the clause 10 gift of the residue.
On my reading of the will as a whole, it is clear that Lloyd’s children who were alive at the date of Brian’s death and who were 21 or who will attain the age of 21 are entitled to the one-quarter share in the Loxton property and the one‑quarter share of the residue of Brian’s estate Lloyd would have taken had he survived the survivorship period.

[2021] SASC 15

26 February 2021