Lang v Davey

Case [2020] SASC 160

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction: Application)

LANG & ORS v DAVEY & ORS

[2020] SASC 160

Judgment of The Honourable Justice Bampton

28 August 2020

SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - ASCERTAINMENT OF TESTATOR'S INTENTION

SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - ADMISSIBILITY AND USE OF EXTRINSIC EVIDENCE IN AID OF CONSTRUCTION

The applicants commenced proceedings pursuant to the Inheritance Family Provision Act 1972 (SA) alleging that they had been left without adequate provision and seeking an order for further provision out of the deceased’s estate – the deceased’s husband had died on 23 July 1976 leaving a will (“the will”) and codicil naming the deceased the sole executor and trustee and sole beneficiary – administration of the deceased’s husband’s estate (“the estate”) was granted to the deceased on 29 September 1976 – the applicants assert that, as the contingency in clause 5 of the will was not satisfied and duties would have been payable on any gifting of property to her under the Succession Duties Act 1929-1975 (SA), the estate never passed to the deceased under clause 5, the gift over took effect, and the deceased was acting as trustee of the whole estate held on testamentary trusts created under clause 6 of the will – the first and second respondents (“the executors”) seek advice and direction regarding two questions:

Whether, on the proper construction of the will and in the events which have happened, any part of the estate was devised or bequeathed to the deceased in her capacity as trustee of the estate to hold:

(a)     upon the trusts declared in clause 5 of the will and, if so, which part or parts were so devised or bequeathed; or alternatively

(b) upon the trusts declared in clause 6 of the will and, if so, which part or parts were so devised or bequeathed.

HELD: On the proper construction of the will, in light of the scheme intended by the deceased’s husband and the actual words used in the will, the deceased’s husband’s whole estate was devised to the deceased in her capacity as trustee of her husband’s estate to hold upon the trusts declared in clause 5 of the will.

Answer to question (a):     Yes, the whole of the estate.

Answer to question (b):     No.

Succession Duties Act 1929-1971 (SA); Succession Duties Act 1929-1975 (SA) s 7, s 8, s 11, s 12, s 17, s 50, s 63, Sch 2; Succession Duties Act 1929-1976 (SA) s 4c, s 8a, s 63b; Statute Law Revision Act 1973 (SA); Succession Duties Act Amendment Act 1975 (SA); Supreme Court Civil Rules 2006 (SA) r 172, r 206; Administration and Probate Act 1919 (SA) s 69; Evidence Act 1929 (SA) s 52, s 53; Inheritance (Family Provision) Act 1972 (SA); Regulations under the Succession Duties Act, 1929-1970 reg 5, reg 6; Regulations under the Succession Duties Act, 1929-1976 reg 5, reg 6, referred to.
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Lang v Davey [2020] SASC 160
Case
[2020] SASC 160
Decision Date

CaseChat Overview and Summary

The applicants in the Lang v Davey case have brought proceedings under the Inheritance (Family Provision) Act 1972 (SA), alleging they have been left without adequate provision and seeking an order for further provision from the deceased’s estate. The deceased, Jean, passed away on 23 July 1976, leaving a will and codicil that named her as the sole executor and trustee and sole beneficiary. Administration of the estate was granted to Jean on 29 September 1976. The applicants claim that the contingency in clause 5 of the will was not satisfied, and duties would have been payable on any gifting of property to Jean under the Succession Duties Act 1929-1975 (SA), thus the estate never passed to Jean under clause 5. Instead, they argue that the gift over took effect, and Jean was acting as trustee of the whole estate held on testamentary trusts created under clause 6 of the will.

The legal issues before the court were whether the applicants had been left without adequate provision and, if so, whether the court should make an order under the Family Provision Act. Additionally, the court had to determine the admissibility and use of extrinsic evidence in aid of construction of the will, specifically a letter written by Mr Malcolm Playford to Jean shortly after the deceased's death. The executors sought to tender this letter as proof of its contents, while the applicants objected, arguing that it was not a business record within the meaning of the Evidence Act 1929 (SA). The court had to decide whether the letter could be admitted and, if so, what its permissible use would be.

The court concluded that the central scheme of the deceased's will was for Jean, as sole executor, to pass as much of the estate as possible to herself as beneficiary free of death duties. The words of clauses 3, 5, and 6 were to be interpreted in light of this central scheme and purpose. The court found that the whole of the estate was devised to Jean in her capacity as trustee of the deceased estate to hold upon the trusts declared in clause 5 of the deceased's will. The court further determined that the executors could tender the Playford letter as extrinsic evidence to assist in interpreting the will, and its permissible use was to show knowledge of relevant surrounding circumstances at the time of making the will, not to show intention.

The court ultimately found that the applicants had not been left without adequate provision and declined to make an order under the Family Provision Act. The court's decision was based on the proper construction of the deceased's will, taking into account the central scheme and purpose of passing as much of the estate as possible to Jean free of succession duty. The deemed operation of the amending Act meant that succession duty was abolished before republication of the deceased's will, before her death, and before the administration of her estate had begun. Therefore, no succession duty was payable on any property derived from the deceased by Jean.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

It should be noted that the express statutory provision in the Administration of Justice Act 1982 (UK) referred to above permitted the court in Marley v Rawlings to receive extrinsic evidence of the testator’s intention to assist in interpretation. Justice Stanley considered that, notwithstanding the absence of an equivalent statutory provision in the Wills Act 1936 (SA), evidence of draft wills, caused to be drafted by a testator or approved by a testator, like pre-contractual negotiations, is only admissible where it demonstrates knowledge of surrounding circumstances. The extrinsic evidenceThe Playford letter The executors sought to tender a letter dated 18 August 1976 written by Mr Malcolm Playford (“Mr Playford”) of Playford Nicolle Burr & Ackland to Jean (“the Playford letter”) within a few weeks of Jim’s death as proof of the truth of its contents pursuant to s 52 and s 53 of the Evidence Act 1929 (SA) (“the Evidence Act”). The executors submitted that having regard to the step taken by Stanley J in Farrelly and the criticism of White J of the “orthodox” common law rule preventing the admission of evidence of Jim’s subjective intentions I might consider that adherence to the orthodox rule is not a fair outcome. Roger and his children objected to the tender of Playford letter, arguing that it is not a business record within the meaning of s 53(4) of the Evidence Act. It was submitted that it is not possible to regard a lawyer’s letter of advice as used in the ordinary course of a lawyer’s practice “for the purpose of recording any matter relating to the business”. It was argued that the letter did not record Jim’s instructions in the ordinary course of practise but referred to them for the purpose of providing advice to Jean. That advice it was argued did not record any matter relating to the business but was, on the contrary, an act or action of the business, that is the performance of a business function, not a recording of any. It was contended that the only available conditions for its admissibility are not satisfied.[33] Further, it was argued that even if the Playford letter were to be admitted, its only permissible use would be to show knowledge of relevant surrounding circumstances at the time of making the will, not to show intention.[33] Southern Equities Corporation Ltd (In Liq) & Ors v Bond & Ors (No 2) (2001) 78 SASR 554. Jean’s nephews and niece argued that the Playford letter is a business record pursuant to s 53 of the Evidence Act. It was contended that the Playford letter is a document “prepared in the ordinary course of Playford, Nicolle, Burr & Ackland’s business for the purpose of recording a matter relating to business” including the recording of the instructions and views of Jim and Mr Playford and the advice given to Jean about those instructions and views. It was submitted that the Playford letter is also admissible for a non-hearsay purpose under the Evidence Act to rebut the contention of Roger and his children that Jim should be imputed with the knowledge of his solicitor, who would have known (it was contended) that the contingency in clause 5 had to be determined at the date of Jim’s death. The contents of the Playford letter directly contradict that contention (either because that view of law on which the contention is based is incorrect due to the assent required of the executor or because Mr Playford did not have that view of the law in any event). It was submitted that it is clear from the Playford letter written some three to four weeks after Jim’s death that Mr Playford believed the contingency could still be satisfied and had not already been determined.

Decision

Reasons for decision

In short, in accordance with the central scheme in Jim’s will, the assets of the estate passed to Jean as beneficiary free of death duties. The central scheme of Jim’s will was for Jean as sole executor to pass as much of the estate as possible to herself as beneficiary as could be free from death duties. The words of clauses 3, 5, and 6 are to be interpreted in light of that central scheme and purpose.Conclusion On the proper construction of Jim’s will in light of the scheme intended by him and the actual words used in his will, that Jean as sole executor should pass as much of the estate as possible to herself as beneficiary as could be free of succession duty, Jim’s whole estate was devised to Jean in her capacity as trustee of Jim’s estate to hold upon the trusts declared in clause 5 of Jim’s will. I answer the questions in the amended interlocutory application as follows:(2A)Whether on the proper construction of [Jim’s] will and in the events which have happened, any part of [Jim’s] estate was devised or bequeathed to Jean in her capacity as trustee of the deceased estate of [Jim] to hold:(a) upon the trusts declared clause 5 of [Jim’s] will and, if so, which part or parts were so devised or bequeathed; or alternatively;(b) upon the trusts declared in clause 6 of [Jim’s] will and, if so, which part or parts were so devised or bequeathed.Answer to (2A)(a): Yes, the whole of the estate.Answer to (2A)(b): No.

Ratio Decidendi

Legal Principle Established

The deemed operation of the amending Act meant that succession duty was abolished before republication of Jim’s will, before his death and before the administration of his estate had begun. As Jim died after the commencement of the 1976 Act, pursuant to s 4c(2) the 1976 Act applied to his estate and s 8a provided that “no duty shall be payable on any property derived from” him by Jean.Jean’s administration of Jim’s estate – no succession duty was paid In answer to a subpoena issued at the request of the executors, Revenue SA (the successor to the Commissioner) delivered to the Court “all documents that relate to the Commissioner of Succession Duties ascertaining the incidence and amount (if any) of duty payable under the” Act in relation to Jim’s estate. By reference to those documents,[6] Playford Nicolle Burr & Ackland instructed by Jean as executor of Jim’s estate commenced the process of making an application to the Commissioner in respect of the assessment of succession duties. The sequence of events revealed by the documents is considered in the following paragraphs.[6] Exhibit E7. By letter dated 2 November 1976, Playford Nicolle Burr & Ackland wrote to the Commissioner. On 5 November 1976, the Commissioner sent a Form 413 regarding valuation to the Federal Deputy Commissioner of Taxation. It is to be noted that the amending Act received assent on 2 December 1976 before the Federal Deputy Commissioner of Taxation returned a completed Form 413 to the Commissioner on 24 February 1977. The Regulations under the 1976 Act were amended on 17 February 1977 to insert “Form C” into the Regulations and include corresponding reference to Form C in reg 5 and reg 6. Regulation 5 as amended required Jean, as executor to file with the Commissioner statements containing the particulars specified in the following forms:(a)Form A, Part I, unless not required by the Commissioner;(b)Form A, Part II, if the circumstances so require;(c)Form B or Form C, as the Commissioner considers appropriate.Regulation 6 as amended provided:The Commissioner may, in any of the cases mentioned in section 16 of the Act, assess the duties by filling up, so far as is practicable, the said forms A and B or C respectively, or at his discretion the form A only, from any information he may obtain, and may assess the duties in accordance with such statements or statement, and shall forthwith deliver a copy of such statements or statement showing the assessed duties to the administrator (if any), or to any person interested in the estate of the deceased, or send the same by post addressed to him at his last known place of abode or business in the State of South Australia; and unless such administrator or other person shall, to the satisfaction of the Commissioner, file statements as required by the Act and these regulations within fourteen days, or such other time as the Commissioner may direct, from the delivery or sending of such said statements or statement, the assessment so made by the commissioner shall be binding and the duty recoverable in all respects as if the said statements or statement had been filed by the administrator and approved by the Commissioner in accordance with the Act and these regulations, but without prejudice to the right of any person interested to appeal in the matter under section 61 of the Act.(Emphasis added)