Lang v Davey
[2020] SASC 160
•28 August 2020
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.
King v Perpetual Trustee Co Ltd (1955) 94 CLR 70; Coorey v George (Supreme Court of New South Wales, Powell J, 27 February 1986); Southern Equities Corporation Ltd (In Liq) & Ors v Bond & Ors (No 2) (2001) 78 SASR 554; Boyes v Cook (1880) 14 Ch D 53, applied.
Brown v Brown (1886) 20 SALR 98; Perrin v Morgan [1943] AC 399; Farrelly v Phillips (2017) 128 SASR 502; Marley v Rawlings [2015] AC 129; Byrnes v Kendle (2011) 243 CLR 253; Re Redfern; Redfern v Bryning (1877) 6 ChD 133; In the Estate of Just [No. 2] (1974) 7 SASR 515; Re Heidenrich, deceased; Cole v Heidenrich (1981) 27 SASR 455; Nicol v Chant (1909) 7 CLR 569; Perpetual Trustee Co Ltd v Wright; Re Will of the law James Paul Gee Cox (Junior) (dec’d) (1987) 9 NSWLR 18, discussed.
Re Pyle; Pyle v Pyle [1895] 1 Ch 724; Re How; How v How [1930] 1 Ch 66; Smidmore v Smidmore (1905) 3 CLR 344; Layer v Burns Philip Trustee Co Ltd (1986) 6 NSWLR 60; Life Insurance Co of Australia v Phillips (1925) 36 CLR 60; Photophone of Australia Pty Ltd (1937) 59 CLR 348; Allgood v Blake (1873) LR 8 Ex 160; Re Ofner; Samuel v Ofner [1909] 1 Ch 60; Lutheran Church of Australia South Australia District Incorporated v Farmers’ Co-Operative Executors and Trustees Ltd (1970) 121 CLR 628; Charter v Charter (1874) LR 7 HL 364; Will of Loughlin; Acheson v O’Meara [1906] VLR 597; Sherratt v Mountford (1873) LR 8 Ch App 928; Van Kerkvoorde v Moroney (1917) 23 CLR 426; Bathurst v Errington (1877) 2 App Cas 698; Armenian General Benevolent Union v Union Trustee Co of Australia Ltd (1952) 87 CLR 597; Croome v Croome (1888) 59 LT 582; Re Carson deceased; Carson v Presbyterian Church of Queensland [1956] St R Qd 466; In the Estate of Josef Bernhard Nies (Deceased) [2014] SASC 93; State Trustees Limited v Edwards [2014] VSC 392; Fulton v Fulton [2014] NSWSC 619; Trenberth v Trenberth [2016] SASC 150; Fielder v Burgess [2014] SASC 98; Arnott v Kiss [2014] NSWSC 1385; In re Hayter; Hayter v Leuckel (1927) 27 SR (NSW) 98; Hasluck v Pedley (1874) LR 19 Eq 271; Constable v Constable (1879) 11 Ch D 681; In re Bridger; Brompton Hospital for Consumption v Lewis [1894] 1 Ch 297; In re Rayer; Rayer v Rayer [1903] 1 Ch 685; O’Brien v Smith [2013] 1 QD R 223; The Trust Co Ltd v Zdilar & Ors [2011] QSC 5; Commissioner of Inland Revenue v Smith (1930) 1 KB 713; Blackwell v Pennant (1852) 9 Hare 551, considered.
LANG & ORS v DAVEY & ORS
[2020] SASC 160Testamentary Causes Jurisdiction: Application
BAMPTON J: James Thomas Lang (“Jim”) died on 23 July 1976 possessed of property, leaving a will dated 5 May 1976 (“Jim’s will”) and a codicil dated 17 July 1976. Jim was survived by his second wife, Phyllis Jean Lang (“Jean”), and his son by his first marriage, Roger James Lang (“Roger”), whom Jean had adopted.
Jean, who did not have any biological children, died on 22 May 2018, aged 97, leaving a will dated 15 September 2017 (“Jean’s will”). The executors named in Jean’s will, Edwin Thomas Davey and Anthony Charles Dalwood (“the executors”), were granted probate of Jean’s will on 15 October 2018.
The executors have made application for advice and directions regarding the construction of, in particular, clause 5 and clause 6 of Jim’s will.
Jim’s will
When Jim made his will 44 years ago with the firm Playford Nicolle Burr & Ackland, he appointed Jean and Roger his executors and trustees.
By clause 4 of the will, Jim gave the whole of his estate and effects both real and personal “unto my Trustees UPON TRUST to hold and deal therewith according to the trusts directions and dispositions hereinafter appearing”.
By clause 5 of the will, Jim gave Jean:
… the whole or so much of my estate as shall upon passing to her hereunder be free of all death duties imposed by the State of the Commonwealth of Australia in which I shall be resident for the purposes of the assessment of the same as at the date of my decease PROVIDED HOWEVER AND I DECLARE that statutory exemptions and rebates of the nature of those presently applying under the Succession Duties Act 1929-1971[1] of the State of South Australia shall not be treated as enabling property to pass to my said wife in terms of this clause.
(Footnote added)
Clause 6 provided:
SUBJECT to the provisions of the next preceding clause of this my Will I GIVE DEVISE AND BEQUEATH all the balance of my estate and effects both real and personal unto my Trustees UPON TRUST to hold the same with power to exercise in respect thereof all the authorities and directions hereinafter appearing and to pay and distribute the annual income to be derived therefrom to and between such of wife PHYLLIS JEAN LANG, my said son ROGER JAMES LANG, my daughter-in-law ANNE MERLE LANG and the children of my said son (whether born before or after my decease) in such shares and proportions to the total or partial exclusion of any one or more of them in such manner and subject to such conditions as my Trustees shall in their absolute discretion determine with power to accumulate for a period of twenty-one years next following my decease and to add to the corpus of my estate any annual income not so distributed in any year AND from and after the death of the last to die of my said wife and my said son or from and after my death if both shall predecease me (hereinafter referred to as “the vesting date”) UPON TRUST both capital and income for such child or children of my said son Roger James Lang as shall then be alive and if more than one in equal shares as tenants in common absolutely PROVIDED ALWAYS AND I DECLARE that is any child of my said son shall die or shall have died prior to the vesting date leaving issue who shall then be alive and who shall have previously attained or shall subsequently attain the age of twenty-one years then such issue shall take and if more than one equally between them the share in my residuary estate which his her or their parent would have taken if they had survived the vesting date.
[1] I note that the Succession Duties Act 1929-1971 (SA) was amended before Jim made his will by the Statute Law Revision Act 1973 (SA) (assented to 6 December 1973) and the Succession Duties Act Amendment Act 1975 (SA) (assented to 20 November 1975). The Succession Duties Act 1929-1975 (SA) was the current Act at the time Jim made his will and at the time he died.
Jim’s codicil
On 17 July 1976, Jim made a codicil to his will revoking the appointment of Roger as executor and trustee and revoking the gift under clause 6 of his will to his daughter in law. By clause 3 of the codicil, Jim confirmed the contents of his will “in all other respects” thereby republishing (that is confirming) his will on 17 July 1976.
The grant of probate to Jean
On 29 September 1976 Jim’s will and codicil were admitted to probate and administration of his estate was granted to Jean as executor.
Jean’s will
Jean’s will provides for a gift of real property to Roger and for pecuniary legacies to various persons and charities. The residue of Jean’s estate pursuant to her will is divided into two equal parts. One part is given to Roger’s children, Andrew James Lang, Stewart Miles Lang, Kirsty Anne Roderick, and Fiona Margaret Grieve, in equal shares as tenants in common. The other is to be paid jointly to Jean’s three nephews and her niece, Roger Furneaux Davey, Andrew Hilton Davey, Edwin Thomas Davey, and Salley Meredith Govey (“Jean’s nephews and niece”).
Inheritance (Family Provision) Act 1972 (SA) proceedings brought by Roger and his children
Roger and three of his four children[2] (“Roger and his children”) commenced these proceedings against the executors and Jean’s nephews and niece pursuant to the Inheritance (Family Provision) Act 1972 (SA) (“the IFP Act”) alleging that they have been left without adequate provision and seeking an order for further provision out of Jean’s estate.
[2] I was informed that Roger’s son, Andrew James Lang, who is a beneficiary under Jean’s will but not a party, may or may not participate in the IFP proceedings.
Roger and his children plead at paragraph [3] of their statement of claim that the net value of Jean’s estate as described in the statement of assets and liabilities filed by the executors is $8,640,342.44.
The application for advice and directions
By their application (“the application”),[3] the executors seek advice and directions regarding:
(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.
[3] FDN 14 seeking advice and directions pursuant to s 69 of the Administration and Probate Act 1919 (SA) and r 172 and r 206 of the Supreme Court Civil Rules 2006 (SA).
Roger and his children asserted that Jean was acting as the trustee of the trust created under clause 6 of Jim’s will on the basis that, as at the date of Jim’s death, duties would have been payable on any gifting of property to Jean under the Succession Duties Act 1929-1975 (SA) (“the 1975 Act”) and therefore clause 6 operated rather than clause 5.
The executors and Jean’s nephews and niece argued that since no death or succession duties were imposed on Jim’s estate, clause 5 operated without clause 6 having any work to do. They further contended that there is no evidence that, during her lifetime, Jean as executor of Jim’s estate purported to hold any part of Jim’s estate on the trusts created by clause 6 of Jim’s will, or made any payments to either herself or Roger under that clause.
The Succession Duties Act 1929 (SA) as at the date of the making of Jim’s will
As at the date of the making of Jim’s will on 5 May 1976, the 1975 Act imposed the payment of succession duty in respect of gifts to spouses.[4] Accordingly, death duties were payable on the whole of Jim’s estate, including any property he owned jointly with Jean as at the date of the making of his will as follows:
·Section 17 of the 1975 Act provided that upon a grant of probate, the Registrar of Probates was required to deliver to the Commissioner of Succession Duties (“the Commissioner”) a copy of the grant.
·Section 12 of the 1975 Act provided that following delivery of the copy of the grant to the Commissioner, the executor or administrator was then required, “within the prescribed time from the grant of administration”, to file with the Commissioner a statement in the prescribed form setting out the details of property owned by the deceased person.
·In accordance with s 7 of the 1975 Act, the Commissioner would then make an assessment of the duties payable.
·The identity of the person who inherited or derived the property would stipulate the rate of duty payable. Schedule 2 to the 1975 Act prescribed that spouses, parents and children paid less than brothers or sisters, who in turn paid less than unrelated persons. Section 8(1)(i) prescribed that duties were payable on property held by a deceased person as a joint tenant and received by a beneficiary by way of survivorship.
·Section 63 of the 1975 Act prohibited the Registrar-General from registering any transmission of real property in respect of the estate until the Commissioner had certified that all duties in respect of the estate had been paid.
[4] Amendments to the Succession Duties Act 1929-1973 were assented to on 20 November 1975 abolishing succession duties on an average-sized family home to the value of $70,000.
In accordance with the 1975 Act, no duty was payable until there was an assessment by the Commissioner. Assessment would not occur until the executor or administrator had lodged a statement in the form prescribed by the Regulations under the 1975 Act (or the Commissioner otherwise acted).
The retrospective abolition of succession duties
On 4 August 1976, 12 days after Jim’s death and before Jean had begun to administer Jim’s estate, the Premier of South Australia announced that the State government would introduce legislation to abolish succession duties on property passing to a testator’s spouse, with retrospective effect from 1 July 1976.[5]
[5] Exhibit E4 (Statement from the Premier dated 4 August 1976).
On 10 November 1976, the Premier introduced the Succession Duties Act Amendment Bill (“the Bill”) in the House of Assembly.
On 2 December 1976, the Succession Duties Amendment Act 1976 (SA) (“the amending Act”) was assented to. Section 2 of the amending Act deemed the amending Act to have come into operation on 1 July 1976. The 1975 Act, as amended by the amending Act, is referred to as the Succession Duties Act 1929‑1976 (SA) (“the 1976 Act”). The 1976 Act relevantly included the following provisions by virtue of insertion under the amending Act:
·Section 4c(2) which provided that the 1976 Act “applies to and in relation to property derived from a deceased person who died after the commencement of the amending Act”; and
·Section 8a, which provided that:
Notwithstanding any other provision of this Act, no duty shall be payable on any property derived from a deceased person by his spouse.
(Emphasis added)
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)
On 28 February 1977, Jean filed with the Commissioner statements containing the particulars specified in Form C (“the Form C”). The Form C is headed:
South Australia
Succession Duties Act 1929-1976
Statement for use in obtaining s 63b certificates in estates where property is derived by a surviving spouse, and a statement in Form B is not required.
Section 63b was inserted into the 1975 Act by the amending Act and provided that, where the Commissioner was satisfied that:
(a)all duties payable by reason of the death of a deceased person have been paid;
(b)that proper security had been given for the payment of those duties;
(c)that no duty was payable by reason of the death of a deceased person; or
(d)that there was other proper cause for the grant of a certificate under this section,
the Commissioner would certify accordingly in writing in a form approved by him.
The Form C does not record that any duties were assessed as payable in accordance with the procedure prescribed by reg 6. The reverse side of the Form C bears initials certifying that the statement provided in the Form C had been assessed and checked. Under the words “Certificates Issued on” there appears a date stamp of 9 March 1977. I infer that on 9 March 1977, the Commissioner issued certificates pursuant to s 63b of the 1976 Act in respect of Jim’s estate. The certificates or copies of the certificates are not amongst the subpoenaed Revenue SA documents.
The Form C also records that on 11 March 1977, a delegate of the Commissioner certified approval of the statement provided in the Form C.
It is to be inferred that the certificates issued on 9 March 1977 were issued pursuant to s 63b(c) of the 1976 Act as the Commissioner was satisfied “that no duty was payable by reason of the death of Jim”.
There is no dispute that the inference to be drawn from the subpoenaed Revenue SA documentation is that no succession duty was payable in respect of Jim’s estate.
What is the proper construction of Jim’s will?
The relevant date for interpretation of Jim’s will is the date of his death.[7] If circumstances surrounding Jim at the date of execution of his will are also relevant because those circumstances were present in his mind when he finalised intentions as to the disposition of his estate, then both dates become relevant.[8]
[7] Re Heidenrich, deceased; Cole v Heidenrich (1981) 27 SASR 455 at 459 per the Full Court.
[8] Nicol v Chant (1909) 7 CLR 569 at 580 per Griffith CJ there citing with approval Re Pyle; Pyle v Pyle [1895] 1 Ch 724; Re How; How v How [1930] 1 Ch 66 at 69 per Maugham J.
As there is a dispute regarding Jim’s expressed intentions in clauses 5 and 6 of his will, it is my duty sitting as a court of construction, to ascertain, if possible, what Jim intended by his words in the impugned clauses, expressly or implicitly, and to give effect as far as possible to that declared intention.[9] In Brown v Brown, the Full Court said:[10]
… the great object in the interpretation of wills is not to ascertain if some paradoxical legal rule can be brought into play, but to give effect to the expressed intention of a testator so far as consistently with the legal rules that can be done.
[9] Smidmore v Smidmore (1905) 3 CLR 344 at 354; Nicol v Chant (1909) 7 CLR 569 at 577 per Griffith CJ.
[10] (1886) 20 SALR 98 at 101.
In Perrin v Morgan, Lord Romer said:[11]
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:[12]
… [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.
[11] [1943] AC 399 at 420.
[12] [1943] AC 399 at 406.
The issue for determination is what Jim intended his words to mean.
As submitted by the executors, the orthodox position regarding will construction is that Jim’s intentions are to be ascertained from an examination of the whole of his will and codicil aided only by “such facts as existed and were known to the testator at the date of the will” which are admissible in interpreting that language.[13] Once Jim’s “overriding” intentions have been ascertained with reasonable certainty, they must be given effect to, if necessary against, the literal sense of the words and expressions.[14]
[13] King v Perpetual Trustee Co Ltd (1955) 94 CLR 70 at 78.
[14] Justice R. White of the Supreme Court of New South Wales, Use of Extrinsic Evidence to Construe Wills at 12 at [21].
Accordingly, the words and expressions Jim used in his will are to be interpreted by reference to the society he lived in at the time he made the will, that is in light of circumstances that surrounded him in Adelaide, when he made and confirmed his will in 1976.
My first task in attempting to ascertain Jim’s overriding intentions is to identify the basic scheme he “had conceived for dealing with his estate” and then, if possible, to construe his will giving effect to “the scheme so revealed”.[15]
[15] Perpetual Trustee Co Ltd v Wright; Re Will of the law James Paul Gee Cox (Junior) (dec’d) (1987) 9 NSWLR 18 where Bryson J cited with approval a passage from the judgment of Powell J in Coorey v George (Supreme Court of New South Wales, Powell J, 27 February 1986).
Evidence is admissible under the principle referred to as the “armchair rule”, under which the Court may place itself in the testator’s position and consider the circumstances by which the testator was surrounded when they made their will to assist in arriving at the testator’s intention.[16] I may have regard to extrinsic evidence that relates to Jim’s surrounding circumstances as “at the date of the will but not to his dispositive intentions”.[17]
[16] Boyes v Cook (1880) 14 Ch D 53 at 56 per James LJ.
[17] David M Haines QC, Construction of Wills in Australia (LexisNexis Butterworths, 2007) at p 65.
Extrinsic evidence permitted under the armchair rule is admissible to explain what Jim has written and show the meaning of his words. I am permitted to consider all material facts and circumstances known to Jim “with reference to which he is to be taken to have used the words in the will”.[18] Evidence which explains what he has written is admissible as it may clarify the meaning of his words.[19] This evidence is “totally distinct from evidence sought to be applied to prove the testator’s intention as an independent fact” in cases of ambiguity,[20] equivocal descriptions, or to rebut equitable presumption.[21] The orthodox position therefore permits, in the construction of Jim’s will, the admission of evidence of circumstances surrounding him at the time he made the will but not direct evidence of, for example, his statements about who he wishes to inherit his estate.
[18] Layer v Burns Philip Trustee Co Ltd (1986) 6 NSWLR 60 at 64 per Mahoney JA citing with approval Life Insurance Co of Australia v Phillips (1925) 36 CLR 60 at 76-7 and Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348 at 357. See also King v Perpetual Trustee Co Ltd (1955) 94 CLR 70 at 78; Allgood v Blake (1873) LR 8 Ex 160 at 162 per Blackburn J on behalf of the Court followed in Re Heidenrich, deceased; Cole v Heidenrich (1981) 27 SASR 455 at 464 and 465 per the Full Court; Re Ofner; Samuel v Ofner [1909] 1 Ch 60 at 67-8 per Farwell LJ; Perrin v Morgan [1943] AC 399 at 414per Lord Atkin and at 420 and 421 per Lord Romer.
[19] Lutheran Church of Australia South Australia District Incorporated v Farmers’ Co-Operative Executors and Trustees Ltd (1970) 121 CLR 628 at 648-9per Windeyer J, there citing Wigram on Extrinsic Evidence in aid of the Interpretation of Wills at p 8; Charter v Charter (1874) LR 7 HL 364 at 365 and 377 per Lord Cairns.
[20] Will of Loughlin; Acheson v O’Meara [1906] VLR 597 at 601 per Hood J.
[21] Sherratt v Mountford (1873) LR 8 Ch App 928 at 929-930 per James LJ.
In applying the armchair rule, I should place myself in the position of Jim as far as possible and interpret what he has expressed in clauses 5 and 6 with reference to that degree of knowledge he possessed as I may discover.[22] Once I have formed an impression through that interpretation, I should act on that impression but it must be more than a mere guess.[23] I must adopt what appears to be the most probable meaning and decide on those proven probabilities.[24]
[22] Van Kerkvoorde v Moroney (1917) 23 CLR 426 at 435 per Isaacs and Rich JJ there following Bathurst v Errington (1877) 2 App Cas 698 at 706 per Lord Cairns.
[23] Armenian General Benevolent Union v Union Trustee Co of Australia Ltd (1952) 87 CLR 597 at 612; 26 ALJ 392 there citing with approval Croome v Croome (1888) 59 LT 582 at 585-6 per the Court of Appeal.
[24] Re Carson deceased; Carson v Presbyterian Church of Queensland [1956] St R Qd 466 at 474 per the Full Court citing with approval Perrin v Morgan [1943] AC 399 at 414 per Lord Atkin; David M Haines QC, Construction of Wills in Australia (LexisNexis Butterworths, 2007) at 2.8.
As Jim made his will 44 years ago, in order to appreciate the words he used in his will and ascertain his intentions as expressed by those words, I require some understanding of the knowledge he possessed, his property, and the family members he expected to benefit. Having conducted such an inquiry applying orthodox principles, I must state what I find Jim’s intentions to be expressed by his words and with reference to his “circumstances and not his intentions as expressed by the words in the abstract”.[25]
[25] David M Haines QC, Construction of Wills in Australia (LexisNexis Butterworths, 2007) at p 65.
The executors submitted that that there is little justification for the continued existence of the orthodox rule or principle excluding the admission of extrinsic evidence of actual testamentary intentions to show the meaning of the words used in a will, except in cases of equivocation or to rebut an equitable presumption. In support of this argument, the executors referred to the criticism of the rule proffered by White J of the New South Wales Supreme Court in paper titled, “Use of extrinsic Evidence to Construe Wills”.[26] The executors pointed out that South Australia is the only Australian jurisdiction not to have enacted legislative provisions concerning the admission of certain extrinsic evidence, including evidence of the testator’s intention in cases of construction. As White J explains in his paper, “[t]hese provisions are essentially identical in form and in substance and are based on the English equivalent, section 21 of the Administration of Justice Act 1982 (UK). Section 21 of the Administration of Justice Act 1982 (UK) was enacted as a result of English Law Reform Committee’s report entitled “Interpretation of Wills”. The executors also pointed out that direct extrinsic evidence of intention is permitted in IFP Act proceedings and rectification proceedings pursuant s 25AA of the Wills Act 1936 (SA).
[26] Justice R. White of the Supreme Court of New South Wales, Use of Extrinsic Evidence to Construe Wills.
The executors submitted that following the decision in Farrelly v Phillips[27] (“Farrelly”) direct statements of intention are admissible as evidence of surrounding circumstances. In Farrelly, Stanley J, with whom the Chief Justice agreed, held that, having regard to the Supreme Court of the United Kingdom’s judgment in Marley v Rawlings,[28] it was permissible to receive draft wills as evidence of surrounding circumstances for the purposes of ascertaining a testator’s expressed intention.[29]
[27] (2017) 128 SASR 502.
[28] [2015] AC 129.
[29] (2017) 128 SASR 502at [29] – [34].
In Marley v Rawlings, the Supreme Court of the United Kingdom considered the approach to the construction of wills should be on the same basis as the interpretation of contracts. The Supreme Court of the United Kingdom said:[30]
When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd, “No one has ever made an acontextual statement. There is always some context to any utterance, however meagre.” To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan that “courts will never construe words in a vacuum”.
Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts: see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd.
...
[T]he approach to the interpretation of contracts ... is therefore just as appropriate for wills as it is for other unilateral documents. This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th ed (2010), chapter 15 and the recent supplement supports such an approach as indicated in Royal Society for the Prevention of Cruelty to Animals v Sharp. Indeed, the well known suggestion of James LJ in Boyes v Cook that, when interpreting a will, the court should “place [itself] in [the testator’s] arm-chair”, is consistent with the approach of interpretation by reference to the factual context.
(Citations omitted)
[30] [2015] AC 129 at 144-145.
Stanley J observed in Farrelly that the approach to will construction in Marley v Rawlings has been applied in a number of single judge decisions in Australia.[31] His Honour noted that “this approach is conducive to coherence with the law of construction of instruments consistent with the approach taken in the joint reasons of Heydon and Crennan JJ in Byrnes v Kendle”. Heydon and Crennan JJ there held that evidence of pre-contractual negotiations is admissible for the purpose of drawing inferences about what the contract meant where it demonstrates knowledge of surrounding circumstances.[32]
[31] In the Estate of Josef Bernhard Nies (Deceased) [2014] SASC 93 at [14]; State Trustees Limited v Edwards [2014] VSC 392 at [138]; Fulton v Fulton [2014] NSWSC 619 at [203] per Hallen J; Trenberth v Trenberth [2016] SASC 150 at [94]; Fielder v Burgess [2014] SASC 98 at [42]; Arnott v Kiss [2014] NSWSC 1385 at [27].
[32] Byrnes v Kendle (2011) 243 CLR 253 at 281 per Heydon and Crennan JJ.
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 evidence
The 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.
In my view, the Playford letter is admissible as a business record under s 53. It is well-established that the purpose of s 52 and s 53 is to prevent the exclusion on technical grounds of evidence which is of undoubted probative value. As noted by Lander J in Southern Equities Corporation Ltd (In Liq) & Ors v Bond & Ors (No 2) (“Southern Equities”),[34] in relation to the previously numbered s 45A and s 45B of the Evidence Act, the sections “are remedial in character and were enacted for the purpose of facilitating proof of evidence in both civil and criminal proceeding. Because they are remedial, they should be given the most liberal construction and any technical construction should be eschewed”.
[34] (2001) 78 SASR 554 at 576.
There is no dispute that a solicitor’s practice is a business. As articulated by Lander J in Southern Equities, before s 53 can operate to permit admission of the Playford letter, three threshold matters must be established. The first is that the Playford letter is “an apparently genuine document”. There was no suggestion it is not. Secondly it must be a business record. A solicitor’s letter to a client providing advice is a document prepared or used in the ordinary course of business. I am satisfied it is a business record. Thirdly if it is an apparently genuine document which has been prepared or used in the ordinary course of business, it must have been prepared “for the purpose of recording any matter relating to the business” that is the solicitors practice. The Playford letter is a document recording advice provided to a client. It records legal advice which is a matter related to the business of a solicitor’s practice. The three threshold matters have been established.
Even though the Playford letter passes the threshold requirements it must not be admitted if I am of the opinion that it should not be admitted for any of the three reasons in s 53(2). First, I am not of the opinion Mr Playford can and should be called to give evidence.[35] Second, I am not of the opinion that the evidentiary weight of the letter is outweighed by any prejudice which might result to any party. Third, it would not be otherwise contrary to the interests of justice to admit the document. The Playford letter will be received into evidence as exhibit E3. Pursuant to s 53, the Playford letter is admissible without further proof and may be used as evidence of any facts stated in it, or any fact may be inferred from it (whether the inference arises wholly from the matter contained in it, or from the matter in conjunction with other evidence).
[35] I understand that Mr Playford is deceased.
I have determined to use certain matters referred to by Mr Playford in the Playford letter as matters from which inferences can be drawn regarding Jim’s knowledge of his surrounding circumstances at the time of making the will for the purposes of ascertaining his intentions.
The other extrinsic evidence sought to be relied on
In support of their submissions regarding the proper construction of clauses 5 and 6 the executors and Jean’s nephews and niece also sought to rely on the following as evidence relevant to Jim’s knowledge at the time he made his will:
·Bundle of newspaper articles and report of the Institute of Public Affairs;[36] and
·An article by Willard Pedrick titled “Oh to die down under, abolition of death and death gift duties in Australia” (“the Pedrick article”).[37]
[36] MFI E5.
[37] MFI E8.
Jean’s nephews and niece support the executors’ submissions regarding the construction, but queried the utility of the executors’ application at this stage in the proceedings. They also sought to rely on the affidavits of:
·Edward Thomas Davy sworn 6 May 2019;[38] and
·Rosemary Caruso sworn 29 May 2019.[39]
[38] MFI D1.
[39] MFI D2.
Whilst Roger and his children quibbled with the reference to political movement to abolish succession duties they accepted there was a move afoot regarding the abolition of succession duties at the time Jim made his will. They accepted that the Pedrick article was admissible for the limited purpose of drawing the inference that there was a “move afoot” across Australia agitating for the abolition of succession duties and a concern about capital flight consequent upon Queensland’s abolition of spousal succession duties in 1975.
They agreed the various newspaper articles are evidence of the public state of mind at the relevant time, but only on the basis that as public documents it might be inferred that Jim was aware of them when making and confirming his will. It was submitted that there is no evidence Jim would have been aware of information of the kind contained within the report of the Institute of Public Affairs. It was pointed out that all but one of the newspaper articles relied on speak only of amendments to the Succession Duties Act 1929-1973 or the 1975 Act, either of which would not have rendered the estate to be derived by Jean under clause 5 “free of death duties”. The exception, it was submitted, is a statement from the leader of the State Opposition, which was then some five years away from forming government.
The newspaper articles will be received as exhibit E5.
The Pedrick article will be received as exhibit E8. It is admissible as evidence of background facts and circumstances relevant to Jim’s state of knowledge at the time he made the will. It is relevant to the inference to be drawn about his knowledge regarding the Queensland legislation assented to in December 1975 with retrospective operation from 25 September 1975 abolishing succession duties on gifts to spouses and the imminent total abolition of succession duties in Queensland. The reference by Pedrick to capital flight is relevant to the inferences to be drawn from the assertion attributed to Jim in the Playford letter to the effect that death duties were about to be abolished in Queensland and “that if this had come about then he would wind up his affairs in South Australia” and move permanently to Queensland.
I have not had regard to the report of the Institute of Public Affairs, the affidavit of Edward Thomas Davey sworn 6 May 2019, or the affidavit of Rosemary Caruso sworn 29 May 2019.
In addition to considering the grants of probate in respect of Jim’s and Jean’s estates,[40] I have had regard to the Statement from the Premier dated 4 August 1976,[41] the Revenue SA documentation,[42] the extracts from Hansard, and statements from the Premier dated 8 July 1975 and 6 November 1975 exhibited to the affidavit of Louise Jan Langridge sworn 28 November 2019.[43]
[40] Exhibits E1 and E2.
[41] Exhibit E4.
[42] Exhibit E7.
[43] Exhibit E6.
Extracts of the Playford letter referred to
The extracts portions of the Playford letter referred to by the executors and Jean’s nephews and niece:
… I will firstly deal with Jim’s removal of Roger as co-executor. His instructions to me in this regard were quite explicit. He did not give me his exact reasons for doing so but I gathered from our conversation that something had happened since the time when he gave me instructions for his Will which led him to believe that Roger was likely to adopt an overbearing attitude towards the administration of the estate and attempt to override any feelings which you might have with regard to the manner in which it should be administered. It was his most clearly expressed wish and intention that you should enjoy the overriding control with regard to the administration of the estate. He had complete trust and confidence in your ability and good sense in this regard which also accounts for the inclusion of Clause 5 in the Will with which I will now deal.
Jim’s first wish and intention with regard to the disposition of his estate was that he would prefer you to be the sole beneficiary of his estate to you without qualification if that were possible without the attraction of crippling death duties. He considered that it was difficult to legislate in advance for an unknown future and he felt it would be preferable to leave the ultimate disposition of his estate entirely in your hands in preference to his attempting to do so. Again he expressed in the most explicit language his complete trust and confidence in you in this regard.
Jim believed that death duties were about to be abolished in Queensland. He said that if this had come about then he would wind up his affairs in South Australia altogether and take up permanent residence in Queensland. With this possibility in mind he instructed me to draft a clause in his Will which would have the effect of leaving the whole of his estate to you without qualification if it could pass to you without attracting death duty. This I attempted to do in Clause 5. This clause was difficult to draft and whether or not it will have the desired effect in South Australia will entirely depend upon the form which the proposed legislation will take.
On the other hand, the revocation of the contingent interest which Roger’s wife took under the Discretionary Trust originated from me. The purpose of this Trust was to create a flexible situation so far as income tax was concerned during your lifetime and also Roger’s lifetime and also to minimize death duties in the event of the estate not passing to you. It was particularly difficult to cate for both of these objectives and a compromise was adopted. However, it occurred to me after the clause had been drafted that the principle of the highest vesting would be attracted as a result of the Discretionary Trust and that the Succession Duties office would choose Roger’s wife as the notional beneficiary by reason of the fact that she would be a stranger-in-blood and so attract duty at a very much higher rate. I pointed this out to Jim and also that it would be possible indirectly to benefit her through the children if the trustees desired to do so. He accordingly instructed me to eliminate her as a beneficiary.
…
I will now explain why I advised you not to sign the two documents which Roger had prepared, one appointing himself and Bob to act as your agents with regard to the administration of the estate and the other undertaking to set your own estate up in the form of a Family Trust of which he and his children would be beneficiaries.
… I considered that your appointment as sole executor was Jim’s own decision which had received his most deep and careful consideration when giving me instructions. …
(Emphasis added)
Newspaper articles, policy speech and Premier’s statements
I have had regard to the following newspaper articles and the statements of the Premier concerning succession duties. The articles numbered 2, 3, and 7 are not part of exhibit E5, as they were found by my Associate when he was researching newspaper reports of the “most specific pledges in relation to succession duties of all the parties” made by the Labor government in the 1975 State Election referred to in the Statement from the Premier on 4 August 1976, exhibit E4.
(1)The Advertiser article published on page 1 on Friday 21 March 1975 titled “Duties burden being studied”.
(2)The Advertiser article published on page 8 Wednesday 25 June 1975 under the heading “The July 12 Poll 9 major statements promised”, referred to succession duty and the comments of the Premier made during his “policy speech at the Norwood Town Hall last night” promising to alter succession duty in South Australia so that a widow or widower without discrimination may inherit an average-sized family home without payment of succession duties.
(3)The Advertiser article published on 25 June 1975, titled “Dunstan promises SA voting change” referred to changes to succession duties so that a widow or widower may inherit without payment of succession duties.
(4)Statement from the Premier dated 3 July 1975 regarding succession duties.
(5)The Advertiser article published on the front page on Saturday 5 July 1975 titled “Put house in joint names Dunstan” recorded that “Mr Dunstan said a matrimonial home valued at $70,000 would be exempt from succession duties if held in joint names and there were no other assets”.
(6)Statement from the Premier dated 8 July 1975 regarding the remission of stamp duties in the wake of the Government’s announcement of its proposed increased exemption of succession duties on matrimonial homes and the Premier’s advice to married couples to put their matrimonial home into joint names.
(7)The Advertiser article published on 9 July 1975 titled “State duties lifted on house transfers”.
(8)The Advertiser article published on page 5 on Friday 17 October 1975 titled “Premier introduces death duties plan” regarding the introduction “legislation providing extensive concessions in the House of Assembly by the Premier”.
(9)The Advertiser article published on 30 October 1975 titled “Death duty Bill passed” regarding passing of the Bill in the House of Assembly.
(10)The Advertiser article published on 12 November 1975 titled “Death duties Bill passes” regarding the passing of the Bill in the Legislative Council.
(11)The Advertiser opinion published on 19 November 1975 titled “How relief from death tax will apply in South Australia”.
(12)The Advertiser article published on 9 February 1976 titled “We would change SA duties Tonkin” stated:
The Liberal party would:
• allow a complete exemption from State succession duties for an estate passing to a surviving spouse. The exemption would include the matrimonial home.
(13)The Advertiser article published on Saturday 22 May 1976 titled “Bounty chairman on death duties”. The article concerns reference made by the Bounty Investments Ltd chairman, Mr JN McEwin to a report on death duties by an all-party standing committee produced in December 1973 and subsequently tabled in the Senate:
That report advocated strongly as a first step, the immediate abolition of all death duties and gift duties as between husband and wife at all levels and a single death duty would be progressively phased out to zero over a period of five years.
Mr McEwin is quoted as saying:
It is interesting to note that Queensland has already given effect to the first of the report’s recommendations and it is pleasing to see that at the next election in South Australia at least one political party would be advocating the same thing. … It is not the fault of the owners if its value trebles or quadruples over the years, but under the present dual death duties system the amount of duty attributable to the house may often greatly exceed the total price which the late owner paid for it. This is a monstrous injustice in anyone’s language.
(14)Statement from the Premier dated 4 August 1976[44] announcing that the State Government would introduce legislation to abolish succession duties retrospectively from 1 July 1976. The Premier is recorded as saying:
In the State Election last year,[45] the Government made the most specific pledges in relation to succession duties of all the parties. We promised to allow widows and widowers to inherit an average sized family home without paying succession duty, and we immediately implemented out pledge.
(Footnote added)
(15)Victor Harbour Times (SA: 1932-1936) article published on page 3 on Wednesday 18 August 1976, titled “Succession Duties”.
[44] Exhibit E4.
[45] The State Election was held 12 July 1975.
Extracts from Hansard
I have also had regard to the following extracts from Hansard.
On 10 November 1976, the Premier introduced the Bill in the House of Assembly. The Premier stated during the second reading of the Bill that the principal object of the Bill was to remove “the burden of succession duty on property passing between spouses and on all bequests to benevolent institutions”.[46] The Premier also made reference to the amendments to the Succession Duties Act 1929-1973assented to a year earlier on 20 November 1975 which “saw a significant easing of this tax in relation to property passing from a deceased person to his family, particularly where a matrimonial home was a major assets in the estate”.
[46] South Australia, Parliamentary Debates, House of Assembly, 10 November 1976, 2067 (Donald Dunstan, Premier).
The Leader of the Opposition, Mr Tonkin, stated his support for the Bill and said:[47]
The legislation was promised by the Premier more than three months ago and it is pleasing to see it at last arrive in this House. It was one of the matters given considerable publicity just before the State Budget came in. The delay that has occurred since that time has caused considerable difficulties in the community. The people affected knowing that there was to be a change and that the legislation was to be retrospective to July 1, a number of estates have been held over and no further action has been taken pending the introduction and passage of the legislation. Those people who have been waiting to expedite the transference of estates have found that their difficulties have increased because of that delay.
(Emphasis added)
Mr McRae, in supporting the Bill, said:[48]
About this time last year, a Bill was introduced which Honourable Members will recall had the effect of providing some alleviation of taxation measures as related to succession between spouses. Members will recall the considerable lobbying of Members on both sides by women’s organisations, and rightly so, as to the sad situation that confronted many spouses in the then context of the legislation and even with the amelioration of the legislation at about this time last year. In speaking in the debate last year, I said in my final sentence that I look forward to the day when succession between spouses would not be taxable.
(Emphasis added)
[47] South Australia, Parliamentary Debates, House of Assembly, 10 November 1976, 2320 (David Tonkin, Leader of the Opposition).
[48] South Australia, Parliamentary Debates, House of Assembly, 10 November 1976, 2322 (Terence McRae).
The executors’ submissions
The executors referred to the general rule that Acts of Parliament which have been passed subsequent to the date of a will do not generally affect the will’s construction.[49] However, it was argued that there is no reason why subsequent legislation should not affect the legal operation of the expression of the testator’s intentions when such intentions have been ascertained by the application of the ordinary principles of construction.[50]
[49] Williams on Wills (LexisNexis Butterworths, 9th ed, 2008) at [54.4].
[50] In re Hayter; Hayter v Leuckel (1927) 27 SR (NSW) 98 at 101, citing Hasluck v Pedley (1874) LR 19 Eq 271, Constable v Constable (1879)11 Ch D 681, at 686; In re Bridger; Brompton Hospital for Consumption v Lewis [1894] 1 Ch 297 at 300; In re Rayer; Rayer v Rayer [1903] 1 Ch 685 at 688.
The executors submitted that the facts and circumstances surrounding Jim at the time he made his will included that for some years prior to the making of the will there had been a political movement across Australia agitating for the abolition of succession duties.
The executors referred to the legislation in Queensland which was assented to on 12 December 1975 with retrospective operation from 25 September 1975 abolishing succession duty on gifts to spouses. It was suggested that the existence of a wider political movement prior to Jim making his will could be inferred from the fact that by the end of 1976 succession duties had been abolished in Victoria, New South Wales, and South Australia.
The executors submitted that Jim knew of the nationwide movement to abolish succession duties as disclosed the Playford letter in which Mr Playford stated:
Jim believed that death duties were about to be abolished in Queensland. He said that if this had come about then he would wind up his affairs in South Australia altogether and take up permanent residence in Queensland.
It is by reference to these facts and circumstances that the executors contended that clauses 5 and 6 focused on the future abolishment of succession duties, not what duties existed as at the time of making the will.
Jim’s intentions read in the light of the surrounding facts and circumstances, it was submitted, are clear from the words of clauses 5 and 6. The whole or so much of Jim’s estate is to be devised to Jean as “shall … be free of all death duties” at the time for the assessment of those duties. The executors contended that “shall” is used in the future tense. The balance of the estate, being that which will not be “free of all death duties” is to be devised to the trust under clause 6. It was submitted that this construction is emphasised by the reference in clause 5 to “the statutory exemptions and rebates of the nature of those presently applying under the Succession Duties Act 1929-1971 of the State of South Australia” not being treated as enabling property to pass to Jean.
The executors contended that the clauses operate upon the fact of the imposition of succession duties in the future after Jim’s death that, not whether the law imposed such succession duties at the time of making the will. As such, any change in the legislation affects the legal operation of Jim’s will.
The executors submitted that the reference in the Playford letter to the proposed legislation is to the legislation announced by the Premier on 4 August 1976. They further submitted that the following passages support the construction they contend is the correct one:
Jim’s first wish and intention with regard to the disposition of his estate was that he would prefer you to be the sole beneficiary of his estate to you without qualification if that were possible without the attraction of crippling death duties. He considered that it was difficult to legislate in advance for an unknown future and he felt it would be preferable to leave the ultimate disposition of his estate entirely in your hands in preference to his attempting to do so.
…
Jim believed that death duties were about to be abolished in Queensland. He said that if this had come about then he would wind up his affairs in South Australia altogether and take up permanent residence in Queensland. With this possibility in mind he instructed me to draft a clause in his Will which would have the effect of leaving the whole of his estate to you without qualification if it could pass to you without attracting death duty. This I attempted to do in Clause 5. This clause was difficult to draft and whether or not it will have the desired effect in South Australia will entirely depend upon the form which the proposed legislation will take.
The executors argued that on the proper construction of the amending Act, no duty was payable at the date of assessment and that the Commissioner correctly determined so. It was submitted that there was no evidence that any other assessment requiring payment of duty was ever made in respect of Jim’s estate, or that any amount was ever paid or required to be paid. Accordingly, the executors contended that the whole of Jim’s estate passed to Jean as it was free of succession duties and it so do beneficially. As such, there was no property held under the trust contemplated by clause 6 of Jim’s will.
The executors submitted that s 8a inserted into the 1976 Act operated in the following manner:[51]
It is desirable to recognise the distinction between the commencement of an Act or other legislative instrument and its application or scope once it has commenced. The two will frequently coincide: the legislation will commence on the date on which it is made and will impinge on rights and obligations as in existence on and after that date. However, an Act may be deemed to have come into operation on a date earlier than when it is made. If this is so, it will again affect rights and obligations as in existence on or after that date, notwithstanding the fact that the law at the time was in different terms.
[51] Dennis C Pearce & Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 8th ed, 2014) at [10.2].
Roger and his children’s submissions
Roger and his children submitted that Jim’s estate never passed to Jean under clause 5 of Jim’s will as succession duties were payable as at the date of Jim’s death, meaning clause 6 converted the whole of the estate into a testamentary trust for the beneficiaries. They contended that:
(1)the gift under clause 5 was a contingent gift, and the gift over under clause 6 vested subject to divesting if the contingency was satisfied;
(2)the contingency in clause 5 was not satisfied because the estate would have attracted succession duty had it passed to Jean under that clause as the law stood at the moment of Jim’s death, which is the only meaning Jim can be taken to have intended; and
(3)the contingency under clause 5 was not satisfied by reason of Jim’s estate being assessed for nil duty following a subsequent retrospective amendment to the 1975 Act; the gift over had already taken effect at this point and there was no estate under clause 5 to assess.
It was submitted that the gift by Jim to Jean in clause 5 was contingent upon the potential effect on that gift of the law applying at the moment of Jim’s death (“the contingency”). Whether the contingency attached to the gift in clause 5 was satisfied was to be determined by reference to the law “as then known to apply”. It was contended that if the contingency was not satisfied, the gift over in clause 6 would operate immediately.
Roger and his children argued that as at the moment of Jim’s death, property derived or deemed to be derived by Jean was liable to succession duty under the 1975 Act. It was submitted that the 1975 Act continued to impose enforceable obligations with respect to such property despite the subsequent retrospective amendment as follows:
(1)Jean was granted probate of Jim’s estate on 29 September 1976. Following the grant, she was under an obligation “forthwith” to deliver to the Commissioner a copy of the grant to be assessed for duties because as at the date of the grant the obligation prescribed by s 17 of the 1975 Act existed. (I note that the obligation prescribed by s 17 was on the Registrar of Probates. Jean’s obligation was prescribed by s 12 of the 1975 Act to, within the prescribed period, file a statement in the prescribed form).
(2)the duty payable under the 1975 Act became a “first charge” upon the property derived from Jim and pursuant to s 11(1) of the 1975 Act became chargeable upon that property “immediately upon the death of a deceased person”.
(3)As a result, any “disposition of that property, or any part of it” before the duty had been paid, or the Commissioner had certified that he held sufficient security for the payment of duty was prohibited pursuant to s 50(1) and s 63, and the administrator, Jean, would become personally liable for the duty should that prohibition be contravened.
(4)Jean was required, within the “prescribed 14 days”, that is 14 days after the grant of probate pursuant to the Succession Duties Regulations, to file with the Commissioner a statement in the prescribed form for the purpose of ascertaining the amount of duty.
It was submitted that these were all provisions that necessarily applied during the period of July to December 1976 in respect of the property derived by Jean in the sense that they imposed obligations and affected the subject property in that period, notwithstanding the retrospective amendment in December 1976.
It was submitted that the expression “be free of all death duties” in clause 5 includes succession duties. It is clear from the admissible evidence, submitted Roger and his children, that Jim’s concern was with succession duty or included a concern about succession duty to which a derivation of property by Jean may be subjected. Moreover, it was submitted, clause 5 makes express mention of “the Succession Duties Act 1929-1971 of the State of South Australia” in the proviso.
It was submitted that the expression “so much of my estate as shall upon passing to her hereunder be free of all death duties” fulfils the necessary function of the subjunctive: Jim did not want any part of his estate to pass to his wife under this clause if were it to pass, it would attract duty. So, the test, it was submitted, was whether property could pass to Jean under clause 5 without attracting succession duty. It was argued that if the test failed, then no part of Jim’s estate was to pass under clause 5 and the gift over in clause 6 was to take effect immediately.
It was submitted that it was therefore a contingent gift (with a gift over) and the (negative) contingency had to be satisfied at the moment of death in order to avoid the gift over taking effect. No part of Jim’s estate was to pass to Jean under clause 5 if, at the date of Jim’s death in real time, this test failed.
It was argued that this is confirmed by the following considerations:
(1)Jim’s will took effect from the date of his death, and it had been determined at that date whether either the gift under clause 5, or the gift over under clause 6 was to take effect; in other words, the date of death was the date at which it was assessed whether or not the gift under clause 5 failed.
(2)The circumstances known to Jim and Mr Playford, at the time the will was executed and at the time of death were that:
(a)while Queensland had moved to abolish succession duty on property derived by a spouse, South Australia had not done so and there was no indication then of its intentions in that respect.
(b)all that had been promised before that was an election promise of the government to “allow widows and widowers to inherit an average sized family home without paying succession duty”.[52]
[52] Premier’s “Statement” of 4 August 1976, tendered as exhibit E4.
It was not until the Statement of the Premier on 4 August 1976 that it was made known that the government intended to introduce legislation “soon” to abolish succession duties for spouses retrospective to 1 July 1976.
It was submitted that the available and admissible evidence does not admit of any inference that Jim or his legal adviser had any knowledge, in May 1976 when Jim’s will was made, either that the government intended to introduce legislation abolishing succession duty for spouses or that such legislation would be made retrospective to 1 July 1976.
It was argued that, at best, as far as Jim or Mr Playford was concerned, there was a hope – maybe even an expectation – that at some time succession duties would be abolished. It was submitted that what else, it may be asked, could Jim do in circumstances where it was unknown whether the abolition would take place before his death and whether any subsequent abolition at some unknown date in the future would be made retrospective to a date before his death.
It was contended that, beset by these uncertainties, a certain point in time had to be chosen at which the contingency must be satisfied, or the gift over take effect. The available points for selection could have been:
(a)the date of the will; or
(b)the date of Jim’s death; or
(c)some “wait and see” formula.
It was pointed out that Jim did not choose either (a) or (c) and, therefore, it could only have been (b), the date of his death.
It was submitted that any suggestion that a “wait and see” formula was chosen, namely, that whether the gift was “free of all death duties” could only be determined at the point of assessment, must be rejected. The suggestion assumes that Jean retained, by virtue of clause 5, an interest liable to be assessed for duty.
Even if, until the administration was completed, Jean could only have claimed that she had acquired a right under the devise and bequest in clause 5 to have the estate duly administered, the question would be whether she had acquired the chose in action created by the devise and bequest, and by virtue of that chose in action an expectation that assets would pass to her upon the completion of the administration, subject to their being realised to meet any outstanding liabilities and to defray the costs of administration, and an interest in respect of those assets.[53]
[53] Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 314.
Roger and his children submitted that since the property liable to be assessed for duty could only have been derived from that chose in action,[54] the prior question remains, whether that chose in action failed at the moment of death in favour of the gift over or the chose in action from which the gift over was derived.
[54] Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 320.
For the same reason, it was submitted that any suggestion that the phrase “upon passing to her hereunder” is to be construed as postponing the “passing” of the estate until the estate had been fully administered, must be also be rejected: the estate bequeathed and devised under clause 5 is “derived from”[55] the chose in action in right of the beneficiary under clause 5 and, absent that chose in action, there can be no “passing” of the estate.
[55] Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 320.
Roger and his children submitted that the presence of the gift over influences the interpretation of clause 5. Clause 6 commences “SUBJECT TO the provisions of the next preceding clause …”, meaning the immediately or nearest preceding clause, i.e., clause 5. Since the prior gift (clause 5) can vest only upon a negative contingency (free of duty), these words vest the estate in the testamentary trust created by clause 6 (the gift over), subject to its being divested in the event that the contingency under clause 5 is satisfied and the gift under that clause takes effect. It was submitted that this operation of the gift over supports the interpretation of clause 5 contended for by Roger and his children.
It was contended that it is not feasible to suggest that because, in point of law, the abolition of succession duties is to be taken to have been effected for estates of persons who died after 1 July 1976, clause 5 must be interpreted as effecting a disposition of Jim’s estate to Jean.[56]
[56] In re March (1884) 28 Ch D 166 at 169.
It was pointed out that Jean takes her title from the will, not from the grant of probate which authenticates the will and provides proof of office. The contingency contended for by the executors as expressing the meaning is not “when” or “as soon as” but “if”. Even if talking about a chose in action created by clause 5, there is no postponement of vesting. It vests at the date of death or the chose in action created by the gift over in clause 6 vests.
Jean’s nephews’ and niece’s submissions
Jean’s nephews and niece sought to rely on the newspaper articles comprising exhibit E5 published prior to Jim’s death and prior to probate being sought. It was their contention that it was widely known that death duties would soon be abolished in South Australia in May – July 1976, and as such Jim intended for the construction of his will to contemplate such future abolition.
Jean’s nephews and niece argued that the evidence on which they seek to rely is evidence of the surrounding circumstances and admissible for the purpose of interpretation of Jim’s will, rather than evidence as to Jim’s intention as an independent fact.[57] They submitted that certain of the background facts and circumstances to the making and republishing of Jim’s will are set out in the Playford letter.
[57] O’Brien v Smith [2013] 1 QD R 223, 226 at [14] there citing The Trust Co Ltd v Zdilar & Ors [2011] QSC 5 at [21].
It was submitted that the Playford letter, the newspaper articles, and the other documents referred to by the executors make clear that the background facts and circumstances to the making and republishing of Jim’s will and the making of the codicil included:
(1)the political movement across Australia to abolish succession duties which clearly would have been known to Jim as a company director;
(2)the resulting legislative changes and proposals in various States, including South Australia;
(3)Jim’s belief that death duties in South Australia were crippling;
(4)Jim’s view that there was uncertainty as to what legislative changes might be introduced;
(5)the possibility that future legislative changes could result in the ability for the estate to be passed to Jean as beneficiary free of death duties; and
(6)Jim’s knowledge of the important role of an executor as the administrator of the estate.
It was contended that it was against that background that Jim’s will, republished on 17 July 1976, appointed Jean as sole executor and trustee of his estate.
It was submitted that Clause 3 of Jim’s will provides, upon the making of the codicil and republishing of Jim’s will on 17 July 1976, that Jean was appointed sole executor to hold the estate on trust and administer it according to the subsequent clauses of the will. Jean was also appointed the sole trustee under the will.
Jean’s nephews and niece identified that the “scheme” of Jim’s will is to leave as much of his estate as possible to Jean without attracting succession duties. They referred to the importance of identifying the “scheme” of Jim’s will as discussed in Perpetual Trustee Co Ltd v Wright; Re Will of the law James Paul Gee Cox (Junior) (dec’d),[58] where Bryson J cited with approval the following passage from the judgment of Powell J in Coorey v George:[59]
It seems to me that one’s task is, first, if it be possible, to ascertain what was the basic scheme which the deceased had conceived for dealing with his estate and then, so to construe the will as, if it be possible, to give effect to the scheme revealed.
[58] (1987) 9 NSWLR 18, at 33.
[59] (Supreme Court of New South Wales, Powell J, 27 February 1986) at 11.
Reliance was placed on the comment in Re Redfern; Redfern v Bryning,[60] regarding the “plain, clear canon of construction” which provides that the spirit of the will as suggested by the whole context of the will is to prevail over the mere letter of the will:
Now, no doubt, the mere letter of the will … is not to be adhered to if a contrary signification can be suggested by the whole context of the instrument. The spirit is to prevail, and the letter is not to be allowed to kill. That I take to be plain, clear cannon of construction.
[60] (1877) 6 Ch D 133, at 136.
It was pointed out that the administration of Jim’s estate had not begun when the Premier announced on 4 August 1976 the abolition of succession duties retrospective from 1 July 1976.
By reference to the Playford letter, within weeks of Jim’s death, Roger began to agitate for control of the administration of the estate but was rebuffed.
It was submitted that on 29 September 1976, when probate of the estate was granted to Jean as executor, she held the assets as executor to administer them pursuant to the provisions of Jim’s will. The assets were vested in her as executor and no beneficiary had any interest, legal or equitable, in the assets of the estate until the estate was administered.
It was up to Jean as executor to determine during the administration:
(1)whether the whole or, if not whole, how much of the estate could be passed to herself under clause 5 free of death duties (being the central scheme of Jim’s will); and
(2)if none of his estate could be passed to Jean free of death duties, Jean would need to “assent” to the trust in clause 6.
Clause 5 imposed no further time constraints on that obligation.
It can be inferred by reference to the Playford letter that before Jean took office as executor she knew that retrospective legislation was imminent pursuant to which she as executor could pass the entire estate to herself as beneficiary free of duty, in accordance with the central scheme of Jim’s will.
As foreshadowed on 4 August 1976, on 2 December 1976 the amending Act was passed and was deemed to have come into effect on 1 July 1976.
Jean’s nephews and niece submitted that after the certification by the Commissioner in March 1977 no duty was payable and the subsequent completion of the administration, no duty was in fact paid and the assets of the estate were held by Jean as executor on trust for herself as beneficiary.[61]
[61] David M Haines QC, Succession Law in South Australia (LexisNexis Butterworths, 2003) at 330, [27.4].
The assets were subsequently passed to Jean as beneficiary. It was argued that Jean’s assent as executor to the passing of the assets to herself as beneficiary pursuant to clause 5 is evidenced by the actions taken between 1977 and 2018 and that Jean as executor never assented to any trust under clause 6.[62]
[62] Commissioner of Inland Revenue v Smith (1930) 1 KB 713; In the Estate of Just [No. 2] (1974) 7 SASR 515 at 524.
It was submitted that Roger and his children by their submissions ask the Court not only to ignore that central scheme of Jim’s will, but to also unnecessarily introduce words into clause 5 to counter that scheme. To do so, it was submitted, would kill the spirit of Jim’s will.
It was argued that Roger and his children want the Court to read into clause 5, “assuming it passes on the date of death” to cut back the general words of clause 5 and cut back the general powers given to the executor under clause 3 and under the general law.
Jean’s nephews and niece submitted that there is no assumed passing on death. There is no direction in Jim’s will to Jean that she must either pass the estate on date of death under clause 5 or assent to the trust under clause 6 at that time.
It was contended that whether certain obligations arose and fell away under the 1975 Act between July and December 1976 is not to the point. Rather, the issue is the proper construction of the will in light of the clear scheme intended by Jim 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 death duty as was done.
Finally, it was submitted that it would have been entirely contrary to Jim’s scheme and the provisions of his will for Jean to have assented to the trust in clause 6 when she knew of the imminent amendment which was going to abolish death duties retrospectively and which would have thereby enabled her as executor to pass the entire estate to herself as beneficiary in exact accordance with the spirit of Jim’s wishes.
Consideration
The object of my task is to discover Jim’s intentions by examining the words he used in his will in the context of the whole of his will. In attempting to discern what he intended his words to mean in clause 5 and clause 6, I have received evidence under the armchair rule so as to place myself in Jim’s position at the time he made his will. As I sit Jim’s armchair, I can take account of the facts and circumstances which were known by him at the time when he used the words contained in the will. This is because “the meaning of the words varies according to the circumstances of and concerning which they are used”.[63] I may not take account of any direct evidence of Jim’s intentions. Mr Playford’s advice to Jean in the Playford letter regarding Mr Playford’s interpretation of Jim’s instructions at the time Jim made his will can be used to draw inferences regarding Jim’s knowledge of his surrounding circumstances. It cannot be used as direct evidence of Jim’s testamentary intentions.[64]
[63] Allgood v Blake (1873) LR 8 Ex 160 at 162 per Blackburn J followed in Re Heidenrich, deceased; Cole v Heidenrich (1981) 27 SASR 455 at 464 and 465 per the Full Court.
[64] Farrelly v Phillips (2017) 128 SASR 502.
The inference to be drawn from a reading of Jim’s will as a whole is that he did not want Jean as his sole beneficiary to pay succession duties. I need to assure myself that this inference is in accordance with Jim’s state of mind and knowledge of the facts and circumstances which surrounded him at the time he made his will.[65]
[65] Blackwell v Pennant (1852) 9 Hare 551 at 552.
I need to be satisfied that the scheme Jim had conceived for dealing with his estate was to devise his property to Jean without the imposition of succession duties and then to construe the will so as to give effect to the scheme, if possible.
I infer from the newspaper articles, the Pedrick article, the Statements from the Premier, the extracts from Hansard referred to above, and the Playford letter that Jim was surrounded by the following facts and circumstances:
·The “move afoot” across Australia to abolish succession duties would have been known to Jim as a company director. The fact that the movement was Australia-wide can be inferred from the legislation assented to in Queensland on 12 December 1975 with retrospective operation from 25 September 1975, the fact that South Australia exempted average-sized family homes from succession duties on 20 November 1975; the fact that, soon after Jim made his will, that movement culminated in South Australia, Victoria, and New South Wales exempting interspousal transfers from duties in 1976 followed by Western Australia and Tasmania in 1977, and the fact that by the early 1980s all States had abolished succession duties.
·The suggestion of the flight of capital to Queensland from the other States induced by the abolition of succession duties. The Pedrick article, in a footnote on page 12, refers to “various newspaper stories, both state and national, indicate that many people in Queensland, and elsewhere believed that abolition of death duties in that state brought very large amounts of new capital to Queensland. Despite the general impression that there had been a flight of capital from the other states, induced by the tax advantage, there are some skeptics…”.
·Just prior to the 12 July 1975 State Election, the Premier during his policy speech promised to alter succession duties.
·On 20 November 1975, amendments to the Succession Duties Act 1929-1973 were assented to exempting interspousal transfer of an average‑sized family home from succession duties.
·That any further abolition of succession duties by the Dunstan Government would likely have bipartisan support evidenced by the Leader of the Opposition’s announcement in February 1976 that the Liberal Party would allow a complete exemption from succession duties for interspousal transfer.
·That the abolition of interspousal succession duty “was one of the matters given considerable publicity just before the State Budget came in”.[66] I infer this is a reference to the 1976-1977 State Budget.
[66] South Australia, Parliamentary Debates, House of Assembly, 18 November 1976, 2320 (David Tonkin, Leader of the Opposition).
I draw the following inferences regarding Jim’s state of mind or knowledge as a company director, possessed of property, living in Adelaide in 1976 at the time he made his will from the foregoing facts and circumstances:
·Jim had a view that there was uncertainty as to what legislative changes might be introduced and he considered that it was “difficult to legislate in advance for an unknown future”.
·Jim considered the possibility that future legislative changes could result in the ability for his estate to be passed to Jean as beneficiary free of death duties.
·Jim was aware of the important role of an executor as the administrator of his estate.
·Jim considered that death duties in South Australia were crippling.
·Jim was aware that Queensland had abolished succession duties on interspousal transfers with retrospective operation and was about to abolish succession duties altogether.
·Jim considered at the time he instructed Mr Playford that if abolition occurred in Queensland he would wind up his affairs in South Australia and move to Queensland.
The extrinsic evidence I have referred to supports the conclusion that there was a movement which gained momentum in the mid-1970s to abolish succession duties. As submitted, “there was change in the air”. I draw the inference that a man such as Jim, a company director possessed of property, would be aware of the potential for change. I infer that he was aware of these matters and engaged a solicitor who gave him advice about succession duties and that Jim, having obtained advice and conceived a scheme for dealing with his estate, gave instructions to draft his will.
The 1975 Act, as at the date of the making of the will and as at the date of Jim’s death, provided pursuant to s 7 that “Every administrator shall pay to the Commissioner succession duties to be assessed by the Commissioner”. Succession duties were only assessed by the Commissioner following a grant of probate and upon receipt of a statement in the form prescribed by the Regulations under the 1975 Act setting out the details of property owned by the deceased person.
Accordingly, it was not until the statement in the prescribed form provided by the administrator had been assessed by the Commissioner and duties had been assessed as payable that the obligation on the administrator prescribed by s 7 arose. Section 11 prescribed that “duty payable” was a first charge on the property derived from the deceased person and shall be chargeable upon the property immediately upon death. On my reading of the 1975 Act, s 11 imposed a notional charge on the property of the deceased person from the date of death maintaining the status quo until assessment occurred. Section 50 protected against the disposal of property of a deceased person that may be subject to succession duty until duty assessed as payable had been paid. Section 63 prescribed duties on the Registrar-General not to register the administrator of a deceased estate as the proprietor of any estate or interest in land of a deceased registered proprietor or make any entry regarding death unless the Commissioner certified that all duties payable had been paid.
As at the date of Jim’s death, before the retrospective operation of the 1976 Act, duty was not payable until Jean had obtained a grant of probate, had provided the statement required by s 12 for the purpose of ascertaining the amount of duty and the Commissioner had made an assessment that duties were payable.
I infer that the scheme Jim devised for his will encompassed in clause 5 what the law might be, not the law as it stood in mid-1976. The scheme was structured to accommodate an amendment to the 1975 Act abolishing succession duties. Clause 5 was worded so that it could only operate upon an amendment to the 1975 Act. Jim did not prescribe that the gift in clause 5 passed to Jean at the moment of his death. Clause 5 has no time constraint. Had legislation abolishing succession duties been assented to prior to and come into operation prior to Jim’s death, clause 5 would operate. The scheme was also structured in order that clause 5 would operate if legislation abolishing succession duties were enacted after his death and made retrospective to a date before his death. The scheme, evidenced by the wording of clause 5, is that the whole or so much of his estate was to be devised or bequeathed to Jean as “shall be free of all death duties” imposed by the State of Australia “in which I shall be resident for the purposes of the assessment” of succession duties. Arguably, clause 5 was also structured to operate if Jim had wound up his affairs in South Australia and taken up residence in Queensland at the time of his death. The law as it stood at the date the will was made, as at the date of Jim’s death and up until the 1976 Act came into operation, necessarily provided for assessment by the Commissioner to occur. Assessment “shall” and could only occur following the grant of probate and the assessment procedure prescribed by the 1975 Act. The proviso in clause 5 to “exemptions and rebates of the nature of those presently applying under the Succession Duties Act 1929‑1971 not being treated as enabling property to pass to” Jean supports this construction.
The operation of clauses 5 and 6 was therefore dependent upon the fact of the imposition of succession duties in the future after Jim’s death. The scheme was such that abolition of succession duties affected the operation of the will. If succession duties were payable, clause 5 did not operate and the gift over under clause 6 would take effect. As it transpired, Jean filed the Form C in compliance with s 12 of the 1976 Act and the Commissioner undertook the assessment procedure prescribed by the 1976 Act. Pursuant to the 1976 Act the Commissioner assessed that no duties were payable and accordingly clause 5 took effect.
Following the Commissioner’s certification in March 1977 that no duty was payable and the subsequent completion of the administration, no duty was paid and the assets of Jim’s estate were held by Jean as executor on trust for herself as beneficiary.[67]
[67] David M Haines QC, Succession Law in South Australia (LexisNexis Butterworths, 2003) at 330, [27.4].
Those assets subsequently passed to Jean pursuant to clause 5 of Jim’s will as beneficiary. Jean as executor assented to the passing of the assets to herself as beneficiary pursuant to clause 5. She did not as executor assent to any trust under clause 6.[68]
[68] Commissioner of Inland Revenue v Smith (1930) 1 KB 713; In the Estate of Just [No. 2] (1974) 7 SASR 515 at 524.
As Jacobs J stated In the Estate of Just,[69] the assent of executors to dispositions under a will is significant:
The assent of the executors to the trust dispositions taking effect and, in the case of a trust of the residuary estate, the ascertainment of the residue, are undoubtedly important criteria. So soon as the executor has assented, — and this he may do informally, or the assent may be inferred from his conduct — the dispositions of the will become operative, and then the beneficiaries have the property vested in them.
[69] In the Estate of Just [No. 2] (1974) 7 SASR 515 at 524.
Jean had a chose in action deriving from the contingent devise and gift in clause 5 of Jim’s will prior to the assent and passing of the property to her under clause 5.
As submitted by Jean’s nephews and niece, there is nothing unusual about executors holding property for after death decisions to be made for example where a testator confers an express right of selection on a beneficiary. Until the beneficiary makes a decision or selection (or the lapse of the gift if the beneficiary dies before making a selection) all of the property is vested in the executor during the administration.
Contrary to the submissions of Roger and his children there is no assumed passing to Jean of the estate on Jim’s death. There is no direction to Jean that she must either pass the estate on date of death under clause 5 or assent to the trust under clause 6.
The construction contended for by Roger and his children ignores the central scheme of Jim’s will and unnecessarily introduces words into clause 5 thereby countering that scheme and “killing” the spirit of the will.
On the proper operation of the amending Act, no duty was payable at the date of the assessment. There is no evidence that any other assessment requiring payment of duty was ever made in respect of Jim’s estate, or that any amount was ever paid or required to be paid. Accordingly, the whole of Jim’s estate passed to beneficially to Jean as it was free of succession duties.
There is no property held under the contemplated trust in clause 6 of Jim’s will. There is no evidence that Jean ever purported to act as a trustee under such trust and her will does not address the existence of any such trust.
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.
3
26
1