Marks v Marks
[2013] VSC 75
•1 MARCH 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PROBATE LIST
No. 03591 of 2011
| ANDREW JAMES MARKS AND DEBORAH SUE BRADY (As Trustees of the Estate of James Noel Marks) | Plaintiffs |
| v | |
| JUNE YVONNE MARKS, PETER BENJAMIN MARKS, JANE HELENE RODWELL AND KATRINA ANN KING | Defendants |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 23-24 APRIL 2012 | |
DATE OF JUDGMENT: | 1 MARCH 2013 | |
CASE MAY BE CITED AS: | MARKS v MARKS | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 75 | |
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Wills – Construction – Testator’s intention – Income to be paid to wife “as she in her sole discretion may require” – Questions answered – Whether words uncertain or ambiguous – Extrinsic evidence – Wills Act 1997, s 36(1)(b).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S J Moloney | Norton Gledhill |
| For the First Defendant | Ms L M Englefield | Roberts Beckwith Partners |
| For the Second Third and Fourth Defendants | Mr C E Shaw | Simon Jaques & Co |
HIS HONOUR:
Introduction
The testator, James Noel Marks, died on 4 December 2006, leaving a will dated 2 May 2006. Probate of that will was granted to Andrew James Marks (“Mr Marks”), Deborah Sue Brady (“Ms Brady”) and June Yvonne Marks (“Mrs Marks”), the three named executors, on 17 April 2007. Mrs Marks was the testator’s second wife. Mr Marks was his nephew. The four residuary beneficiaries of that will were the testator’s children from his first marriage, Jane Helene Rodwell, Peter Benjamin Marks, Deborah Sue Brady and Katrina Ann King.
By an originating motion filed on 12 July 2011, two of the three executors and trustees, Mr Marks and Ms Brady, sought answers to various questions concerning the proper construction of a clause in that will. The third executor and trustee, Mrs Marks, was named as the first defendant, and the three remaining residuary beneficiaries, Jane Rodwell, Peter Marks and Katrina King, were named as the second to fourth defendants (“the remainder defendants”), to the originating motion. The plaintiffs, the first defendant and the remainder defendants were separately represented at the hearing.
The Will
For present purposes, the following provisions of the testator’s last will are relevant:
…
3.I DIRECT that my Trustees shall not be less than two nor more than three in number and the power of appointing a new Trustee or Trustees may be exercised by the Trustee or Trustees of my estate for the time being (and if more than one jointly) but if at any time there shall be less than three Trustees of my estate nevertheless the then Trustee shall have all the powers, authorities and discretions conferred hereby or by law upon my Trustees and may act in all respects as if there were two or more Trustees hereof.
4.I DECLARE that subject in all respects to the provisions of Clauses 5, 6 and 7 and the rights of my said wife thereunder, should any difference of opinion at any time exist between or among my Trustees in relation to the commission or omission of any act or otherwise howsoever in the execution of the trusts of this my Will or of any Codicil hereto or in the administration of my estate the opinion of the majority of my Trustees at that time shall prevail and notwithstanding that one or more of them may be personally interested or concerned in the matter in dispute or question.
5. I GIVE AND DEVISE to my Trustees all my right title and interest in and to the freehold property known as and situated at 62 Kilburn Grove, Mount Martha, being the land in Certificate of Title Volume 7923 Folio 107, owned by me and my wife JUNE YVONNE MARKS (as tenants in common in equal shares) and the contents thereof which are owned by me UPON TRUST to permit my said wife to have the use, occupation and enjoyment thereof during her life , she paying in respect of the whole of the said property all principal sums and interest secured thereon by way of mortgage or otherwise and any rates, taxes and other outgoings thereon and keeping the same and the contents in a good and habitable state of repair (fair wear and tear and damage by fire, lightening (sic), flood, storm and tempest excepted) and keeping the same insured to the satisfaction of my Trustees AND I EMPOWER my Trustees at the request of my said wife at any time to join with her in selling the said property and to employ the proceeds of such sale belonging to my estate in the purchase or erection for her of another residence to be held (or the interest herein of my estate to be held) upon the same trusts including the trust for sale and erection or repurchase as are herein declared in respect of the said property or alternatively at the request of my said wife to invest the proceeds of such sale and to pay the net income arising therefrom to my said wife during her life in addition to any other payments by this my Will directed to be made to her AND I DIRECT that on the death of my said wife or her no longer requiring the same, my interest in the said property or the proceeds of sale thereof shall fall into and form part of my residuary estate.
6.I GIVE DEVISE AND BEQUEATH all the residue of my estate to my Trustee UPON TRUST for sale calling in and conversion into money and:
6.1TO PAY all my just debts funeral and testamentary expenses and the probate and estate duty (if any) on the whole of my dutiable estate.
6.2TO PAY to my said wife during her life so much or the whole of the annual income thereof as she in her sole discretion may require AND I DIRECT that any income foregone by my said wife and not determined by my Trustees to be retained by my estate shall be divided equally between my children PETER BENJAMIN MARKS, JANE HELENE RODWELL, DEBORAH SUE BRADY and KATRINA ANN KING or if any one of them is deceased then the same shall be held by my Trustees for the child or children of that deceased child in accordance with the provisions of Clause 8 hereof.
6.3Upon the death of my said wife to stand possessed of my residuary estate and any income thereon then undistributed in trust for such of my children the said PETER BENJAMIN MARKS, JANE HELENE RODWELL, DEBORAH SUE BRADY and KATRINA ANN KING as shall be living at the date of death of my said wife and if more than one equally between them as tenants in common.
7.7.1 NOTWITHSTANDING the trust for sale hereinbefore contained I DIRECT my Trustees at the request of my said wife at any time to permit her to have the use, occupation and enjoyment of the Melbourne residence owned by me (presently Apartment 405 “Parklane”, 2 Slater Street, Melbourne and being the land in Certificate of Title Volume 10479 Folio 090, or any replacement city residence owned by me at the date of my death) together with all my personal chattels, as that expression is defined in Section 5(1) of the Administration & Probate Act 1958 (Victoria), therein for so long as she may (subject to Sub-Clause 7.3 of this clause) in her sole discretion require, my said wife paying all rates, taxes and other outgoings including premiums for fire and other insurances and keeping the same in a reasonable state of repair.
7.2I FURTHER DIRECT that if my said wife at any time so requests, my Trustees shall sell such residence and apply the proceeds of sale in or towards the purchase of a replacement residence for her and any residence so purchased shall be held by my Trustees on the same trusts as those upon which the residence was held under this clause, including the provision of this sub-clause.
7.3I FURTHER DIRECT that so long as my said wife is able to reside in such residence or any replacement residence acquired by my Trustees pursuant to this clause, my Trustees shall not sell such residence unless my wife has first consented in writing to the sale PROVIDED HOWEVER that if at any time it becomes necessary for my said wife to be admitted to a nursing home other similar establishment and her treating doctor certifies in writing that it is unlikely she will ever be able to live in such residence again, then my Trustees may sell the same.
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The Questions
The plaintiffs sought answers to the following questions:
(a)What is the proper construction of the words “as she in her sole discretion may require” (“the words”) in clause 6.2 of the Will?
(b)Do the words mean that the first defendant is confined to obtaining so much of the annual income of the residuary estate as she needs for the purpose of her own use as living and lifestyle expenses?
(c)Do the words mean that the first defendant is able to obtain so much of the annual income of the residuary estate as she wants, regardless of the purpose or purposes for which she proposes to use that income?
(d) Do the words have some other, and if so what, meaning?
The Factual Background
The following factual background is derived from the affidavits of Mr Marks sworn on 12 July 2011 and 18 April 2012 and the affidavit of Mrs Marks sworn on 22 September 2011 and 19 April 2012 and all filed in this proceeding. Neither deponent was cross-examined at the hearing.
The testator was a well-known Melbourne businessman and was a director of a number of public companies. He held Bachelor of Commerce and Bachelor of Law degrees from the University of Melbourne.
The testator’s first marriage was to Elizabeth Marks. As previously stated, there were four children from that marriage. It ended in divorce. Elizabeth Marks died on 28 December 2005.
The testator met Mrs Marks in around 1985 through mutual friends. Their friendship developed into a relationship around 1986. They moved in together around 1990 or 1991 and were married in April 1993. There were no children from this marriage. Mrs Marks had two sons and a daughter from a previous marriage.
Mrs Marks deposed that during her time with the testator, they had a close relationship and “enjoyed a fantastic life together”. She said that she and the testator were involved in the lives of their children and grandchildren, and they often had the family and friends to their home. Initially, Mrs Marks worked and contributed to household costs. Later, the testator gave her a monthly allowance for housekeeping. Mrs Marks also said that the testator often bought things for her and he had made sure that she had everything that she could want. She said that the testator had been extremely generous and kind, and that during her time with the testator she “never needed or wanted anything”.
Early in their marriage, the testator had set up a share portfolio for Mrs Marks. She did not pay for the original shares. Subsequently, the testator made the investment decisions and dealt with the broker for her. She would write a cheque from her bank account for any costs.
In 1998, the testator was diagnosed with malignant melanoma. He had a couple of operations to remove tumours and was in reasonable health until April 2006.
On 12 February 2002, the testator made a will. Clause 7(1) of this will was in the same terms as clause 6.2 of the testator’s last will.
Mrs Marks deposed that over the last two years of his life, the testator had called her into his study two or three times and talked to her about how he planned to divide up his assets after he died. Mrs Marks said that he had asked her if she was happy with what he was planning, but she would say “that’s fine” to whatever he had said. She said that although she remembered the testator showing her documents on those occasions, she could not remember any particular document that he had showed her. She said that he told her that he wanted to take care of her and that he wanted her to carry on “the same”. She also said that he wanted her to have the same lifestyle after he had gone. Mrs Marks stated that she “understood that by this he meant that he wanted me to have the quality of life we could afford while he was alive”.
On 3 June 2005, the testator made a will (“the 2005 will”). By this will Mrs Marks and the testator’s four children were appointed as executors. The terms of the 2005 will were identical to those of the 2 May 2006 will save for the nominated executors. Mrs Marks deposed that the testator had told her that he was getting a new will done in 2005. She knew that the will allowed her to live in the properties at apartment 405 “Parklane”, 2 Slater Street, Melbourne (“the Parklane property”) and 62 Kilburn Grove, Mt Martha (“the Mt Martha property”) and gave her income from his estate. But she could not remember if the testator told her this or gave her a copy of the will to read. She said that the testator told her that he wanted to “look after” her. She said that the testator often told her that he wanted her to have the same lifestyle after he had gone.
In early November 2005, the testator asked Mr Marks to assist in the management of his financial affairs including the orderly winding up of his family trust, the J N Marks Family Trust of which Markway Investments Pty Ltd was the trustee. Neither the testator nor Mrs Marks were capital beneficiaries of that trust. That family trust was eventually wound up in early July 2007 and the assets distributed in specie to the testator’s four children, the beneficiaries of that trust.
Mr Marks deposed that he met the testator at the Parklane property in November 2005. The testator told him at that meeting that during the course of his marriage to Mrs Marks, he had gifted her assets to the then value of approximately $1.5m comprising a half share in the Mt Martha property which they held as tenants in common, and a share portfolio. The testator told Mr Marks that under his 2005 will, Mrs Marks was entitled to occupy the Parklane property for life or an alternative property if required and that she was entitled to occupy the Mt Martha property for life. The testator also told Mr Marks that under that will, Mrs Marks was entitled to receive any income she needed for living purposes to the extent that her income from her share portfolio was insufficient for her needs. The testator said that as he had been very generous to Mrs Marks during the marriage, he did not wish to build up her asset base anymore, but was concerned that she have sufficient income to continue living in the manner to which she had become accustomed, including overseas trips with first class travel and accommodation and a new car as required.
In response to this evidence, Mrs Marks stated that the testator did not tell her that she was only entitled to income from his estate that she needed for living purposes to the extent that her income from her share portfolio or other sources was insufficient. She said that he told her many times that she should “live without a worry, with first class travel, new cars and no restrictions” and that she should live her life “to the full”.
In a memorandum dated 14 November 2005 to his four children and Mrs Marks, a copy of which was provided to Mr Marks, the testator stated as follows:
As you know, after a few problems on our recent world trip I have returned to Melbourne and my health is good at the moment. But I have one major worry that needs to be addressed in the event that my life ends before I have had enough time to reorganise the family trust in a way that looks after June for life, distributes some money to you four children as beneficiaries of my Trust and minimise the amount of tax payable as the share portfolio of the Trust is sold. Under the terms of my will, she has a life interest in so much of the income of my estate from year to year as she needs, together with the right to live at Parklane and Mt Martha for as long as she wishes, and the right to have those properties sold and replaced by other properties of a similar value.
I am not terribly happy creating a will with a life tenant entitled to the income because it ties up the assets which should go to my children as soon as possible. …
I have decided that I have looked after June well enough with sufficient assets for her to carry on and be comfortable and that, should some of my assets or income not be needed to look after June in the future, the executors, who include June, can reach agreement to make a partial sale and distribution to the four children. There are plenty of assets in the Trust and in my name and in June’s name, which include a share portfolio of hers worth over $800,000. However, I don’t wish to build her assets up anymore but merely to be sure that the income flows to her is sufficient for her needs.
At present I pay her $3000 per month for housekeeping and personal expenses. This appears to be sufficient for her needs. However, I pay all expenses relating to the two houses, the cars, maintenance, etc, and these will pass across to her in the event of my death. However, June is not the sort of person who would ever ask any members of my family (her co-executors) for money and it is this area that I wish to address in this memo.
Andrew Marks is 51 years old, is a qualified solicitor, and is skilled not only in the law but in areas of business, including investments in the share market and property. He is highly intelligent and I have spoken to him along the lines of helping out in the event of my death. He is happy to help as an adviser only, principally to June, but also to you four children. Running the Trust during its winding down period and making sure that income flows from my estate to June in an appropriate and sufficient stream are areas that he would handle without any trouble at all.
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From the above, you will see that the income of my estate after this exercise is completed will be close to $100,000 complemented by June’s direct income from her portfolio of about $35,000. She would pay some tax on this of course. Assuming she is left with roughly $100,000 after tax this should be enough for her to live on, and if there are any extra requirements of money, etc, for a new car or a trip, this would have to be found out of the assets which are available. I think transferring $6000 per month to June, together with her own investment income, should enable her to live comfortably on this basis.
In respect of the house at 62 Kilburn Grove, Mt Martha, this is already 50% owned by June and 50% by me. June likes the house and loves the garden and it will be totally and completely up to her whether she keeps it or sells it. Obviously if she is on her own she will not come down as often as she has in the past. In the event that she decides to sell the house, and assuming it realises say a net $800,000, this would generate further income of roughly $35,000 per annual split equally between her and my estate, and would also be available to assist June to live comfortably. …
...
Mr Marks had a further meeting with the testator, probably on 18 April 2006, where they again discussed the matters they had talked about in November 2005. The testator told Mr Marks that he wished to change the executors and trustees of his will to Andrew Marks, June Marks and Deborah Brady in lieu of Mrs Marks and all four children appointed under the 2005 will.
The testator prepared a memorandum dated 18 April 2006, a copy of which he gave to Mr Marks. Relevantly, it stated the following:
I have been thinking about the provisions of my will, which was drawn up last year by Adrian Triaca, and the position of June and Andrew Marks in relation to running the affairs of the family in my absence. At present the executors are June and the four children, which is quite a number. They don’t all have to prove probate, any one or two could do it.
However, what worries me is that somebody has to be available to run my affairs, keep a watch on bank balances, transfer money around, pay bills and make sure the money is in the right place and that June is well protected and well looked after when she needs assistance.
I decided that the best thing to do was to have Debbie only of the children as an executor together with June and Andrew as a full executor so that he has as much authority as the others. I discussed this with Debbie and she thinks it is a good idea. I also discussed it today with Andrew and he thinks it is a good idea and he is willing to act and help.
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I also said that it would be quite right for my estate to lend money to June if she is spending more than the income of my estate and is short of money. The main thing is to document it so that it appears in the books as a loan and on her death that loan would be repayable to my estate, which would be fair to my children.
At the testator’s request, Mr Marks met the testator at the Mt Martha property on 1 May 2006. The testator told him that he was going to execute his new will the following day. He told Mr Marks that his new will would be in similar terms to the 2005 will in that it would provide that in the event that his wife needed any additional money for living expenses or a new car or an overseas trip, then she could have resort to the income of the estate.
At about this time, the testator handed Mr Marks a document dated 18 April 2006 and entitled “Future Financial Strategy of the J N Marks Family Group”. The document set out the then assets, liabilities and net asset and income positions of the testator, Mrs Marks and the J N Marks Family Trust. The value of Mrs Marks’ share portfolio at market was stated to be $950,000. The document also stated the following:
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5. Future Strategy:-
(a)For the 2005/6 year the Trust and Jim have made capital profits of about $500,000. Hence there will be quite a bit of tax to pay. In the prior tax year the Trust made approximately $300,000 and this was in the form of capital profits which were distributed to the four families equally to a total amount of $285,000.
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For the following year, 2006/7, there will be tax losses of approximately $300,000 come through to the Trust …
In the following year the Trust can be wound up with all of the remaining shares sold and the capital distributed to the four children as beneficiaries.
Overall, therefore, the total income available to look after June and perhaps the children is in the order of $250,000 per annum, which should be more than sufficient.
(b)Until the Trust is wound up an allowance will be paid to June monthly. At the moment she gets $3000 per month and in the short term major accounts can be paid by Jim’s estate, such as insurance, body corporate fees, car registration and insurance, etc. Alternatively, the advance to June each month could be increased to say $6000, which together with her income should be close to the mark. …
(d) …
I have told Andrew that if June lives beyond the income available, money can be loaned to her from my estate, which should be properly documented so that it can be repaid on her death from her assets. She has left her estate to her three children and she has been adequately looked after during my life.
(e)When June reaches the age of say 80 and assuming she is well, she may wish to stay at Parklane or move to something smaller. This can done under the terms of my will. It may be possible when Parklane is sold to distribute some of the cash to the children at that stage. June would have to agree, but this would be a good idea if it could be arranged as they have been waiting for so long. I am concerned that my children will have to wait until June dies before they inherit my estate at that time. Partial distributions over time may be wise as there could be some bitterness. However, they have each inherited over a million dollars from their mother, which should keep them quiet for the time being.
Also, the possibility of June marrying again to somebody who has sufficient funds to support her should be taken into account.
(6)The above guidance will help in the winding up of the Trust and my estate and hopefully there will be no problems or fights from the children. The requirement that I seek in my affairs is simplicity, fairness and the fact that June is my main concern.
If my death is imminent I would pass across approximately $100,000 cash to June to tide her over for a year or so.
On 2 May 2006, the testator executed his last will, which was prepared by a firm of solicitors.
Mrs Marks deposed that her husband told her that he was re-doing his will. She said that she knew he was changing the trustees but otherwise leaving her the same gifts. She could not remember if the testator told her this or gave her the will to read.
Mrs Marks also deposed that, in the final months of his life, the testator often told her that she must live her life the way they always had, and that he was insistent upon it. He kept saying that he wanted her looked after and taken care of. She stated that she had no doubt that the testator would provide for her because he was so determined to convince her to carry on in the same way as if he were still alive.
In response to Mr Marks’ evidence about his meeting with the testator on 1 May 2006, Mrs Marks said that the testator did not say to her, either at around the time of this visit or at any time, that it was only if she needed additional money for living expenses or a new car or an overseas trip that she could resort to the estate income. He did not say that she must pay for such things first from her own resources or that the estate income was only for any shortfall in such expenditure. She said that her husband was consistent on this issue with her, especially over the last two years of his life.
At a further meeting between Mr Marks and the testator on 21 June 2006, the testator told him that he had decided to gift his half share of the Mt Martha property to Mrs Marks (valued at approximately $450,000), assign $600,000 of a $900,000 loan due to him from Markway Investments Pty Ltd in its capacity as trustee of the J N Marks Family Trust, and to pay a sum of $100,000 into Mrs Marks’ bank account. The testator asked Mr Marks what he thought of the proposal. Mr Marks said “Jim, it is your money and what you do with it is up to you”. The testator told Mr Marks that Mrs Marks was not a greedy woman and one of the consequences of the gifts of approximately $1.1m which he proposed to make to her was that she would have a much higher after tax income and would not therefore need to resort to the income of his estate to maintain her lifestyle to nearly the same extent if at all. At the testator’s request, Mr Marks did not at that time inform the testator’s children of this proposal.
Mrs Marks deposed that the testator told her that he was giving her his half share of the Mt Martha property, at the suggestion of some of his friends who thought it only fair given the long time they had been married. He told her that he agreed with his friends. Mrs Marks said that she did not ask for this gift. She further said that she was unaware of the assignment of $6000,000 of the loan to her until after her husband died. She said that she did not pressure the testator to make this gift or the payment of funds into her bank account. The testator’s half interest in the Mt Martha property was subsequently transferred to Mrs Marks. Mrs Marks said that she sold that property in late 2007 or early 2008 for $908,000.
In November 2006, the testator went into palliative care, and on 4 December 2006, he died at the age of 77.
In the financial years ending 30 June 2007 and 30 June 2008, no distributions of income were made by the estate to Mrs Marks. It was all retained by the estate. In late 2008, Mrs Marks telephoned Mr Marks and asked for some money from the estate. Mr Marks said that it was fine but asked her what she required the money for. She told him that she wished to give some money to her son David “to assist him with his mortgage”. Mr Marks declined and told her that that was not what the will provided or what the testator had intended. Mrs Marks agreed that this was the reason she gave Mr Marks when she requested the money on that occasion. However, she said that she disagreed with Mr Marks that this request was not what the testator had intended. She deposed that the testator intended her to have access to the estate for any purpose she decided and that she believed that the testator would have approved this use of her income. Mrs Marks stated that the testator strongly believed in family helping each other and parents providing for their children. These expressions by Mrs Marks of the testator’s opinion, rather than statements by him, were objected to by both opposing counsel and I agree that they are inadmissible.
In early 2009, Mrs Marks asked Mr Marks for some money from the estate to pay for her forthcoming overseas trip. He agreed and sent her a cheque for $50,000 from the estate.
A further amount of $50,000 was paid to Mrs Marks in early July 2010 from the estate for an overseas trip to Europe. Part of this sum was to cover the costs of Mrs Marks’ daughter, Sally Anile, who was travelling with her.
There was then a meeting on 3 April 2011 between Mr Marks, Mrs Marks, Mrs Anile and Mrs Marks’ son-in-law, Robert Anile, to discuss matters relating to the estate. Mr Anile told Mr Marks that Mrs Marks had received advice that she was entitled to the whole of the income of the estate. Mr Anile said that Mrs Marks wanted all of the income from the estate to establish a trust fund for the benefit of her children. Mr Marks said that he would need to consult with his co-executor, Deborah Brady. Later that day, Mr Marks consulted Ms Brady, who disagreed with Mrs Marks’ demand.
In a letter to Mrs Marks’ solicitors dated 16 June 2011, Mr Marks stated the following:
As a co-trustee I am charged with the duty of administering the estate according to its terms and that is precisely what I have been doing since probate of the Will was granted and is what I intend to keep doing. My interpretation of clause 6.2 of the Will is that your client is entitled to such income that she NEEDS as distinct from WANTS. That interpretation is reinforced by the discussions the deceased had with me on 2 May [sic] and 21 June 2006.
In order to assess what the needs of you [sic] client are I need to know the following information:
1.Her after tax income;
2.Her expenses including any overseas travel which I would expect to be first class air travel and accommodation.
In a further letter to Mrs Marks’ solicitors dated 4 July 2011, Mr Marks explained his position in more detail:
It is my view, and that of Deborah Sue Brady, that the proper construction of [Clause 6.2], both on its face, and also given the testator’s intentions, is that your client is entitled to that income which she needs for the purpose of her own living and lifestyle expenses. That is what she will receive and has received in the past.
Your client now demands payment of the entire sum of the annual income of the residuary estate. This is of course in addition to the substantial amounts of money which she received from the testator which did not form part of his estate, totalling approximately $3 million.
This request has not been demonstrated to me to fall within that category which I consider is required for it to be validly distributed to your client. This request for the said income must be for the purposes of her own living and lifestyle expenses and it is for your client to demonstrate that. Indeed, your client asserted to me on 3 April 2011 that her demand for the income of the residuary estate was so that she could herself set up a trust fund for the future use of the funds.
I have a duty as trustee to ensure that any distributions which are made, are made within the terms of the Will. In pursuance of that duty I have requested your client provide me with a clear statement of the purpose for which she proposes to use the sum as well as your client providing me with details of her financial affairs so as to enable me to understand that her request is being made so as to support her own living and lifestyle expenses. Your client refuses to supply a response to either class of information requested.
I hereby re-state my requests.
Furthermore, your client has never provided me with any explanation for any contrary construction of Clause 6.2 of the Will.
Unless your client is able to provide evidence to me of the information requested within seven (7) days from the date hereof, as well as a proper explanation for your client’s construction of the Will, I shall be compelled to seek the opinion of the Supreme Court of Victoria. …
Mrs Marks agreed that she told Mr Marks at this meeting that she was considering establishing a family trust. Although she said in her first affidavit that she had, on the advice of a personal banker, had a family trust set up, she corrected this in her second affidavit. No family trust had ever been established.
It was this difference of opinion about the meaning of clause 6.2 of the testator’s last will which prompted the present proceeding. Although Mrs Marks had said in her first affidavit that, in her conversation with Mr Marks about the family trust, she requested income “from Jim’s estate trust for my own use”, the case was not fought on the basis that she had been denied any income from the estate for her own needs. Rather, the dispute centred on the more theoretical issue of what was the correct construction of clause 6.2 of the testator’s last will so that the trustees would know how to act in the future.
In July 2011, the residuary estate, subject to any interests in favour of Mrs Marks, consisted of the Parklane property worth approximately $2.5 to $3m and non-real estate property, such as shares and term deposits, worth approximately $1.4m. The net income of the estate after tax and franking credits for the financial year ending 30 June 2010 was about $82,000. That too had all been retained in the estate.
Relevant Construction Principles
It is a well settled principle that a will should be construed in a manner that will 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.[1] In the often repeated words of Lord Romer in Perrin v Morgan:
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. To understand the language employed the court is entitled, to use a familiar expression, to sit in the testator’s armchair.[2]
This construction principle allows evidence of the surrounding circumstances to be admitted to assist in ascertaining the testator’s intentions without the need to first establish any ambiguity.[3] However, at common law, evidence of a testator’s dispositive intention was inadmissible except where there was equivocation – that is, only where the terms of a will were applicable indifferently to more than one person or thing might evidence be admitted to resolve that ambiguity.[4]
[1]Perrin v Morgan [1943] AC 399, 406 (Viscount Simon LC), 420 (Lord Romer); Re McIlrath [1959] VR 720, 724 (Herring CJ, O’Bryan, Dean, Sholl and Adam JJ); Re Edwards deceased [1981] VR 794, 795–796 (Kaye J); Re Blake (Deceased) (2009) 25 VR 27, 32 [31] (J Forrest J); Westmore v Westmore (2009) 26 VR 579, 583 [13] (Emerton J); Martin v Martin [2010] NSWSC 700 [37] (White J).
[2][1943] AC 399, 420.
[3] The Public Trustee of Queensland v Smith [2009] 1 Qd R 26, 31-32 [20]-[21] (Atkinson J).
[4] Doe v Hiscocks (1839) 5 M & W 363, 368-369 (Lord Abinger CB); Charter v Charter (1874) LR 364, 377 (Lord Cairns).
The common law’s strict limitation on the types of evidence that may be admitted by a court of construction has now been relaxed to some extent by s 36 of the Wills Act 1997 (“the Wills Act”). That section provides that:
(1)In any proceedings to construe a will, if the language used in a will renders the will or any part of the will-
(a) meaningless; or
(b) uncertain or ambiguous on the face of the will; or
(c)uncertain or ambiguous in the light of surrounding circumstances-
evidence may be admitted to assist in the interpretation of that language.
(2)Evidence which may be admitted under subsection 1(c) does not include evidence of the testator’s intention.
(3)Nothing in this section prevents the admission of evidence which would otherwise be admissible at law in any proceedings to construe a will.
It was common ground between the parties that, if after taking into account evidence that was only admissible under the armchair principle, there remained uncertainty or ambiguity as to the meaning of clause 6.2, then s 36(1)(b) of the Wills Act might be called in aid to admit extrinsic evidence to assist in the resolution of that uncertainty or ambiguity. The parties were not, however, in agreement as to whether there was any such uncertainty or ambiguity.
Obviously, the question as to whether there is uncertainty or ambiguity on the face of the will can only be answered after the construction exercise has been undertaken without resort to the extrinsic evidence.[5]
[5] In re Williams, Decd [1985] 1 WLR 905, 908 (Nicholls J); Re Blake (2009) 25 VR 27, 34 [36] (J Forrest J).
Summary of the Submissions
Mr Moloney of counsel, who appeared for the plaintiffs, submitted that it was apparent from the will and the surrounding circumstances that the testator’s primary intention was to provide and care for Mrs Marks. He submitted that the proper construction of clause 6.2 of the will was that Mrs Marks was entitled to have so much or the whole of the annual income of the estate which she needed for her own personal maintenance and lifestyle as she might determine, but not otherwise. This was because in clause 6.2 “require” meant “need” not “want”. This construction was supported by analysing the different words used in clauses 5, 6 and 7 of the testator’s last will.
Alternatively, if the Court held that the meaning of clause 6.2 was “uncertain or ambiguous”, then Mr Moloney submitted that, when regard was had to the extrinsic evidence admissible under s 36(1)(b) of the Wills Act, it became clear that the testator intended Mrs Marks to have access to so much of the income of the residuary estate as she needed for her living expenses, as determined by her, but not for any other purposes.
Mr Shaw of counsel, who appeared for the remainder defendants, adopted Mr Moloney’s submissions. He placed emphasis on the point that, once the circumstances by which the testator was surrounded were appreciated in accordance with the armchair principle, it became clear that the testator only intended to provide for Mrs Marks’ needs. He also submitted that analysis of the different words used in clauses 5, 6 and 7 of the testator’s last will led to the conclusion that Mrs Marks could not just decide to take whatever she wanted.
Alternatively, Mr Shaw submitted that, as the words used in clause 6.2 were amenable to more than one meaning, there was ambiguity and that when, as permitted in those circumstances, one turned to the extrinsic evidence the case was put beyond any doubt.
Ms Englefield of counsel, who appeared for the first defendant, submitted that the plain meaning to be given to the word “require” was decide, nominate, specify or elect. She submitted that Mrs Marks had the unfettered discretionary power to have paid to her all or any of the income of the residuary estate without demonstrating need, explaining proposed use or providing reasons. Accordingly, the Court should not infer or imply any right on the part of the other trustees to restrict or supervise Mrs Marks’ right to decide how much of the income she wanted to receive.
Ms Englefield submitted that there was no need to consider the alternative extrinsic evidence approach because the will was neither uncertain nor ambiguous.
Construction of Clause 6.2 of the Will
I turn first to the circumstances by which the testator was surrounded when the will was made. He was a lawyer and businessman and was in his 70s and not then in good health. His estate consisted of the Parklane property, a half share in the Mt Martha property and other personal property. He had four children from his first marriage. His first wife had passed away. His second wife, with whom he was in a loving relationship and to whom he had been married for 13 years, had two sons and a daughter from a previous marriage, and he did not have any children by her. His second wife owned the other half interest in the Mt Martha property and he had established a substantial share portfolio for her many years ago. His second wife was about 70 years old, in good health, and he was paying her housekeeping and personal expenses.
Under the testator’s last will, which was prepared by solicitors, the named beneficiaries were his second wife and his four children. Nothing was given to his second wife’s own three children. The gifts to Mrs Marks, to the extent that she was entitled to them, were only for life; she was not given any property absolutely. Moreover, there was no absolute gift of any property to his four children; their interest was subject to Mrs Marks’ life interest. This approach, including the relevant wording of clause 6.2, had appeared in the same form in the 2005 will.
In construing the words “as she in her sole discretion may require” in clause 6.2, the Court must consider the terms of the whole instrument, and against the factual matrix described above, in order to ascertain its meaning.[6] The plain meaning of the words should be given effect[7] unless the words have a technical legal meaning in which case they should prima facie be given their strict technical meaning.[8] It must also be borne in mind that in ascertaining the meaning of the words of a will in question, it would be a serious mistake to attribute to them the meaning of the words from another will.[9]
[6] Fell v Fell (1922) 31 CLR 268, 273-274 (Isaacs J).
[7] Fell v Fell (1922) 31 CLR 268, 273 (Isaacs J).
[8] Re McIlrath [1959] VR 720, 724 (Herring CJ, O’Bryan, Dean, Sholl and Adam JJ).
[9] King v Perpetual Trustee Co (Ltd) (1955) 94 CLR 70, 80 (Dixon CJ, Williams, Webb, Fullagar and Taylor JJ).
Mr Moloney commenced his submissions by referring to dictionary definitions of the word “require”. The Macquarie Dictionary gives the following meanings:
(a) to have need of; need: he requires medical care;
(b)to call on authoritatively, order or enjoin (a person etc) to do something: to require an agent to account for money spent;
(c) to ask for authoritatively or imperatively; demand;
(d)to impose need or occasion for; make necessary or indispensible: the work required infinite patience;
(e)to call for or exact as obligatory: the law requires annual income-tax returns;
(f) to place under an obligation or necessity;
(g) to wish to have: will you require tea at four o’clock?
(h)to make demand; impose obligation or need: to do as the law requires.
The New Oxford Dictionary of English gives the following meanings of the word “require”:
(a)need for a particular purpose; depend on for success or survival: three patients required operations;
(b)cause to be necessary: it would have required much research to produce a comprehensive list;
(c)specify as compulsory: the minimum car insurance required by law;
(d)(of someone in authority) instruct or expect (someone) to do something: you will be required to attend for cross-examination;
(e)(require something of) regard an action, ability, or quality as due from (someone) by virtue of their position: the care and diligence required of him as a trustee; and
(f) wish to have: please indicate how many tickets you require.
Mr Moloney submitted that, in this context, there were two possible meanings to the word “require”. The first was “need” and the second was “the creation of a right or obligation which is exercised by a demand or claim that must be met, or the assertion of a right which is satisfied upon demand”. He contended that the meaning to be attached to the word “require” was “need”. It was the primary dictionary definition.
Ms Englefield submitted that clause 6.2 created two discretionary powers. The first discretionary power was conferred on Mrs Marks. She was given the sole discretion to have paid to her all or any of the income of the residuary estate without provision of reasons, demonstration of any need for the payment of living, lifestyle or other expenses or any requirement to explain her proposed use of such funds. It was an unfettered discretion. The second discretionary power, which was also unfettered, was conferred on the trustees to determine to retain “any income foregone” by Mrs Marks. After the exercise of these two discretions, any amount of income not already dealt with was then to be divided between the testator’s children equally. However, in my opinion, whilst it is correct to say that clause 6.2 created two discretionary powers – the first conferred on Mrs Marks and the second on the trustees – that, of itself, sheds little light as to what the testator had intended by the word “require”.
All counsel referred to the wording of other clauses in the will in support of the construction of clause 6.2 which they sought to advance.
Ms Englefield first placed reliance on the change to the nominated executors from the 2005 will as something that favoured the construction advanced on behalf of Mrs Marks. It reduced the number of the testator’s children who were appointed executors, retained the widow in that position and appointed an independent and professional family member. It therefore made it easier for Mrs Marks to be part of a majority decision by the trustees. However, I consider that the amendment does not offer any guidance to the resolution of the question as to what clause 6.2 means because, as Ms Englefield herself pointed out, majority decisions play no part in clause 6.2.
Ms Englefield next submitted that the exclusion of clauses 5, 6 and 7 of the will and the “rights of my said wife thereof” from the requirement of multiple trustees (clause 3) and the allowance of majority decisions (clause 4) must be given effect in the determination of the meaning in clause 6.2. She submitted that this exclusion clearly reinforced the sole discretion granted to Mrs Marks in clause 6.2 itself. Ms Englefield further submitted that clause 7.1 repeated the pattern of clause 6.2 in that it permitted Mrs Marks the use and occupation of the residence for so long as she may, subject to clause 7.3, “in her sole discretion require”. Thus, the will, read as a whole, showed an intention to give the widow an unfettered discretionary power to advance any or all of the income of the estate to herself or to retain the residence (subject to the testator’s right to sell based on medical opinion). Ms Englefield submitted that the conferral of the discretionary power in clauses 6.2 and 7.1 was to be contrasted with the provision of a full and proper life interest in clause 5. She emphasised that the right given to Mrs Marks under clause 6.2 was a personal right and was not limited to her role as a trustee.
Mr Moloney, on the other hand, submitted that the opposite conclusion resulted from his examination of the wording of clauses 5 and 7 of the testator’s last will. That is, that “require” meant “need”. He considered first the wording of clause 5. In that clause, the testator gave a life interest to Mrs Marks of his half interest in the Mt Martha property. However, he also conferred a power on Mrs Marks to “request” the sale of the property and either to use the proceeds to purchase or erect another residence or to have the annual income from the investment of the proceeds paid to her for life. Further, on her death or her “no longer requiring the same”, the testator’s interest in the property or the proceeds fell into and formed part of the residuary estate.
Under the structure of clause 5, Mrs Marks’ life interest already existed. That being so, it was submitted, the word “requiring” could not mean that any request or demand created that right. It already existed. The phrase “requiring the same” was used to describe the circumstance where, notwithstanding her entitlement, Mrs Marks gave up her right to use, occupy and enjoy the Mt Martha property or the replacement property or to have the income paid to her. That is, “no longer requiring” meant “no longer needing”. The alternative meaning of describing the circumstance of the creation of the authority or right by demand was not apt. The other possibility of the right ceasing to exist was “death”, which clearly envisaged a situation where there was no longer any need to use, occupy and enjoy a property or to receive the income.
The word “request” is relevantly defined in the New Oxford Dictionary of English to mean “politely ask (someone) to do something”. Thus, the word “request” was used in the sense of asking the trustees to do something which, so long as Mrs Marks wanted it, the trustees were obliged to exercise their powers and duties as directed. Mr Moloney submitted that, importantly, the testator did not use the word “require”, when speaking of the occasion for the exercise of that power even though that word, using its connotation of “mandating”, might just as easily have been used. This pointed up the testator’s intention when using the word “require” to mean need rather than describing the circumstance of the making of a direction or command.
Under clause 7.1, Mrs Marks was able to “request” the trustees that she be permitted to have the use, occupation and enjoyment of the Parklane property and the personal chattels therein for so long as she may “in her sole discretion require”. Mr Moloney submitted that as the words “at the request” were present in clause 7.1 at its beginning, those were the words that triggered the obligation on the trustees to grant to Mrs Marks the right to use, occupy and enjoy. He submitted that this right was conditioned by a request from Mrs Marks and the continuation of the state that in her discretion she required the property. This plainly meant whether she needed it for her use. The word “require” did not trigger Mrs Marks’ right to use the property, the act of her “request”, as earlier contained in clause 7.1, triggered that right. Mr Moloney submitted that this was the same drafting device that was used in clause 5 where the creation of the right was brought about by a request followed by a determination by the exercise of her discretion as to her needs, by the use of the word “requiring”. Again this pointed up the particular meaning of the word “require” which the testator employed in his last will, which was one of connoting “need”.
Under clause 7.2, Mrs Marks could “request” that the Parklane property be sold and the proceeds applied towards the purchase of a replacement property. The power was not expressed to be exercised when Mrs Marks “may require”. Mr Moloney submitted that the different language used was most significant and compelled the conclusion that the word “require” in the will did not connote command or ask, but need. The word “request” in clauses 7.1 and 7.2, as it was in clause 5, was used in the sense of asking or directing the trustees to do an act.
Mr Moloney also pointed out that, with respect to the trustees’ powers to decide whether to retain in the testator’s estate any income foregone by Mrs Marks, the testator has chosen to use the word “determine” in the very same sentence in which the word “require” appeared. He submitted that this wording indicated that “require” did not mean “determine” as otherwise the latter word would have been used in the phrase “in her sole discretion may require”. Had the testator intended Mrs Marks to be entitled to the income under clause 6.2 on the basis that because she wanted it and had asked for it, he could have employed the same language of “request” or “determine” to denote that right. In my opinion, the selection of the word “require”, instead of “request” or “determine” supported the construction contended for by the plaintiffs. When a command was to be expressed, the word “request” was used. When the concept of “need” was in issue, the word “require” was used.
Mr Moloney submitted that to read clause 6.2 in the way sought by the first defendant would in effect mean that it conferred an absolute entitlement upon Mrs Marks to receive the income. That construction would, in substance, be no different from the conferral by the testator upon the trustees of an unconditional obligation to pay the income to Mrs Marks. That is not what had occurred with respect to the testator’s last will. He could have easily included such a provision but did not do so. Instead, the testator had attached a condition on the duty to pay which was different to the above. Mr Moloney submitted that clause 6.2 should not be construed in a way that resulted in it meaning that there was an absolute obligation to pay all the income of the estate to Mrs Marks, when the words of the will did not expressly do that. He submitted that the word “require” ought to take a meaning conformably with the existence of a demonstrable need for the income, for that would be a construction consistent with the adopted form of drafting.
As has already been observed, the class of beneficiaries under the will were Mrs Marks and the testator’s four children. Under the scheme of his will, what the testator intended was to provide for these five beneficiaries through the utilisation of life and remainder interests. As Mr Shaw submitted, this was the device he had employed to achieve an appropriate balance between his desire, on the one hand, to ensure that Mrs Marks’ needs were provided for during her lifetime and, on the other hand, to leave his assets to his children absolutely.
Once that testamentary intention is understood, it becomes reasonably clear, in my opinion, that it was not the testator’s intention to allow Mrs Marks to use her discretion in clause 6.2 to expand the class of beneficiaries to include those who were not intended by the testator to be the object of his bounty directly. Thus, he did not intend that Mrs Marks could decide that she wanted the annual income so that, for example, she could then give it to charities or to her children or to establish a family trust and accumulate assets in that entity using the surplus income. Similarly, it was not intended by the testator that Mrs Marks could use her discretion under clause 6.2 to increase her assets so that she could then through her own will indirectly benefit objects which the testator had not intended to benefit.
The next part of the will to be considered are the words “in her sole discretion”. It may be accepted that the Court should not adopt an interpretation that renders redundant words used in the will. Mr Moloney submitted that the words “in her sole discretion” imported two concepts. One was that a value judgment was to be made and the other was that it was to be made by Mrs Marks. He submitted that were the word “require” to mean that Mrs Marks could request any amount she wanted regardless of her needs and purposes, then the word “discretion” would be redundant. He further submitted that the word “discretion” was an inapt use when referring to the concept of “wanting”. Mr Moloney submitted that when the word “require” meant “need”, then the discretionary judgment contemplated by the phrase was fully invoked, whereas if “require” was construed to mean “want” then the discretionary judgment was not facilitated. Indeed, there would be no occasion for the exercise of the discretionary judgment because the obligation to pay would be triggered merely by Mrs Marks expressing what she wanted. This would render the words “in her sole discretion” redundant.
Mr Shaw also submitted that if “require” meant “want”, the phrase “in her sole discretion” would be redundant. He submitted that how much of the income Mrs Marks wanted was something that only she could decide. Thus, it was only if the word “require” meant “need” that the phrase “in her sole discretion” had work to do as it was only then that it became meaningful for Mrs Marks to make a judgment as to how much, in her sole discretion, she needed.
On the other hand, Ms Englefield emphasised that the phrase “in her sole discretion” meant that Mrs Marks had an unfettered and uncontrolled right to require the payment to her of any or all of the income of the estate. The power in clause 6.2 was a personal right given to Mrs Marks that was not limited to her role as a trustee.
Ms Englefield referred to the decision of McGarvie J in Karger v Paul.[10] In that case, the testatrix died leaving a will wherein she appointed her husband, Mr Smith, and her solicitor, Mr Paul, as executors and trustees. The will provided the following:
3.I GIVE DEVISE AND BEQUEATH all my property both real and personal of whatsoever nature and wheresoever situate to my husband, the said ALFRED HENRY SMITH during his lifetime with power to my Trustees in their absolute and unfettered discretion and upon the request of my said husband to pay or transfer the whole or part of the capital of my said estate to the said Alfred Henry Smith for his own use absolutely.
4.UPON the death of my said husband then my said Trustees shall pay or transfer to my cousin RITA KARGER … the rest and residue of my Estate for her own use absolutely.
[10][1984] VR 161.
Mr Smith made a written request to himself and Mr Paul to pay the entire capital of the estate to him, and in the exercise of the discretion conferred upon them, the trustees acceded to this request. After Mr Smith’s death, Mrs Karger sought to impeach the validity of the discretion that had been exercised. In rejecting Mrs Karger’s claim, McGarvie J said the following with respect to the exercise of a discretionary power:
The discretionary power given to the trustees by cl 3, was a power, upon the request of Mr Smith, in their absolute and unfettered discretion to pay or transfer the whole or part of the capital of the estate to him. In my opinion the effect of the authorities is that, with one exception, the exercise of a discretion in these terms will not be examined or reviewed by the courts so long as the essential component parts of the exercise of the particular discretion are present. Those essential component parts are present if the discretion is exercised by the trustees in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. The exception is that the validity of the trustees’ reasons will be examined and reviewed if the trustees choose to state their reasons for the exercise of discretion.
…
In short, the Court examines whether the discretion was exercised but does not examine how it was exercised.[11]
[11][1984] VR 161, 163-164.
The principles that constrain the exercise of discretionary power as discussed by McGarvie J in Karger v Paul relate to fiduciary powers that were exercised by the trustees. However, the discretionary power that was reposed in Mrs Marks personally by virtue of clause 6.2, for which she was the sole beneficiary of an exercise of that power, may be described as a non-fiduciary discretionary power. For present purposes, it is sufficient to note that although all the grounds upon which an exercise of fiduciary powers may be challenged may not necessarily apply equally to non-fiduciary powers, the donee of a non-fiduciary discretionary power nevertheless does not, as a general rule, need to give reasons for the exercise of that power.[12]
[12]Geraint Thomas, Thomas on Powers (2nd ed, Oxford University Press, 2012), [10.145], [10.157], [10.195], [11.76].
In the end, it seemed to me that Karger v Paul did not assist the argument being advanced on behalf of Mrs Marks. Whether the discretionary power is a fiduciary power or a non-fiduciary power, it seems to me that at the very least the power must be exercised “in accordance with the purposes for which the discretion was conferred”. That can only be decided when the question of what “require” means has been resolved. The same could be said about the other “essential components”, to exercise the discretion in good faith and upon real and genuine consideration.
If Mrs Marks would, notwithstanding the conferral of absolute discretion, still be subject to certain constraints in the exercise of the non-fiduciary discretionary power, then it could not be said that the words “in her sole discretion” would be rendered redundant. However, it seems to me that the proper analysis should proceed on an understanding that the words “in her sole discretion” were used in conjunction with the word “require” in clause 6.2 in the context of this will where the testator had chosen to use the word “request” or “determine” in other parts of the will.
Once it is understood that the testator had chosen to employ the word “require” in clause 6.2 to mean something different from asking for the income merely because Mrs Marks wanted it, it becomes reasonably clear, in my opinion, that the words “in her sole discretion” were inserted to ensure that Mrs Marks was to be the sole person to decide the level of lifestyle which she wished to enjoy without the need to justify or give reasons for that decision. There is also no requirement that she exhaust her income before she can exercise her discretion to call for the extra income to meet her lifestyle and living expenses. Given the loving relationship the testator had shared with Mrs Marks, he would have trusted her to exercise good judgment as to the level of lifestyle she wished to enjoy, and, therefore, it is unsurprising that he conferred such a discretion on her. Thus, Mrs Marks need not give reasons why she is travelling on first class rather than economy class flights or staying at a five star hotel rather than a bed and breakfast. The discretion as to how luxurious a lifestyle she wishes to have rests with her.
However, it does not follow, in my opinion, that the trustees are obliged to pay her a sum of money merely because she asserts that it is for the purposes of her lifestyle and living expenses. It must be remembered that Mrs Marks’ discretionary power exists in parallel with the trustees’ concomitant obligations to administer the trust in accordance with the terms of the will. To allow the words “in her sole discretion may require” to have a practical application necessarily entails Mrs Marks responding to any reasonable requests by the trustees to demonstrate that the money was needed for a particular purpose connected with her lifestyle and living expenses. This practical consequence does not mean, as Ms Englefield submitted, that the trustees have a right to supervise Mrs Marks’ expenditure. Rather, it is a necessary incident to the discharge of the trustees’ obligations to ensure that the will is properly administered and that Mrs Marks has not exceeded the terms of the power conferred on her. In my opinion, Mrs Marks would not need to produce every receipt or account for every dollar she has spent during the year, nor would she be required to set out how every dollar of the extra income to be paid to her will be spent. It also does not necessarily entail the production of Mrs Marks’ financial position. On the other hand, given the myriad possibilities in which the needs for her lifestyle and living expense may arise, any attempt to prescribe the exact manner in which Mrs Marks is to respond to any reasonable requests by the trustees would give rise to significant difficulties as well as being virtually impossible. Any requests for such information, and the manner in which Mrs Marks is to respond, must be within the spirit of clause 6.2, which requires the parties to co-operate and exercise good sense.
The interpretation placed on clause 6.2 is also consistent with the way the testator inserted the words “in her sole discretion” in clause 7.1 so as to ensure that Mrs Marks was the only person who was to decide whether she continued the enjoyment of her personal right to use and occupy the Parklane property without the need to justify or give any reasons for her decision, subject only to the medically based limitation under clause 7.3.
It can be readily accepted that an inference should not be made where it does not necessarily result from all the will taken together[13] and an implication should not be drawn unless it is so probable that the mind could not resist it.[14] However, a distinction should be drawn between the drawing of an inference or implication and the giving effect to the meaning of words which appear within the context of the will. The result of the construction exercise here with respect to clause 6.2 is simply the consequence of the latter and does not depend on any inference or implication.
[13] Upton v Ferrers (1801) 5 Ves 801; Fell v Fell (1922) 31 CLR 268, 274 (Isaacs J).
[14] Andrews v National Trustees Executors and Agency Co of Australasia Ltd (1936) 56 CLR 1, 13-14 (Dixon J).
Ms Englefield submitted that the court must attach as much significance to the absence of the words “needs for her living and lifestyle expenses” in clause 6.2 as to the inclusion of the words “sole discretion” in clauses 6.2 and 7.1. I agree that the Court should not ignore the fact that the testator had not included the words “needs for her living and lifestyle expenses”. However, that consideration does not overcome the fact that the Court must give effect to a construction required by the words in the context in which they appear in the present will.
Ms Englefield also argued that the interpretation pressed by the plaintiffs would take away the essence of the gift as what was given to Mrs Marks was not a life interest in income but an ability on her part to call for income exclusive of control by the trustees. However, this submission presupposes the existence of a discretion to call for the income without it being limited to her needs. The submission does not inform the inquiry into the meaning of the words “in her sole discretion may require” in clause 6.2.
In undertaking the inquiry into the meaning of the word “require”, some regard should also be had to whether the word “foregone” in clause 6.2 provides any assistance.
Ms Englefield submitted that what the testator intended by the word “foregone” was to give Mrs Marks the ability to forego – that is, to the extent that Mrs Marks did not decide to take the whole of the income, the extent of the remainder was foregone. She submitted that the word “foregone” supported the construction she advanced in the sense that income could only be foregone by Mrs Marks if she was eligible to call for it in the first place without it being needed for her living and lifestyle expenses.
Mr Moloney submitted that the word “foregone” did not assist in the construction of the word “require” as there was no necessary implication that an entitlement had to be pre-existing before one could forego it.
The word “foregone” is defined in the Oxford English Dictionary to include “Let go (involuntarily); lose, forfeit” and “Go without, deny to oneself; let pass, omit to take or use; give up, renounce”. I accept that if “require” meant an amount which Mrs Marks could have paid to her had she exercised her discretion to determine that she wanted it, then the word “foregone” is consistent with her giving up all or part of the annual income which she could have determined to take but did not do so. However, in the context in which it has been used, the word is also consistent with the former meaning in the sense that if Mrs Marks, after exercising her discretion, did not require the income for her personal lifestyle and living expenses, she has involuntarily lost or forfeited the income. It must also be borne in mind that the gift to income in clause 6.2 was not merely to allow Mrs Marks to live at a subsistence level. Mrs Marks may still “forego” the income by not exercising her discretion to call for the whole of the income or part of it to enjoy a higher level of lifestyle if her own income was insufficient for that. I accept Mr Moloney’s submissions that the word “foregone” does not connote a meaning that presupposed the ability to have all of the income had Mrs Marks so determined in order for it to have a meaningful operation.
Furthermore, as has already been noticed, Mrs Marks’ right under clause 5 already existed without her having to request or require it. However, in describing the circumstance that her right may cease to exist, the testator did not employ the words “foregoing the same”. This indicates that the testator did not necessarily, by the use of the word “foregone” in clause 6.2, intend it to mean giving up of an entitlement by not calling for it when Mrs Marks could have done so.
The word “foregone”, therefore, does not have a controlling or determinative influence on the meaning to be attached to the word “require” in the context clause 6.2.
Therefore, having regard to the text and structure of the will, and, considered in the light of the testator’s surrounding circumstances when the will was made, in my opinion the testator did not intend by the expression “in her sole discretion may require” to mean an unfettered personal discretion to call for any or all of the income of the estate to be paid to Mrs Marks regardless of her needs for her personal lifestyle and living expenses. What the testator intended was to allow Mrs Marks to decide, without the need to justify or provide any reasons, what she needed for her lifestyle and living expenses and to call the income for that purpose. There is no requirement that she exhaust all of her income before she can exercise that discretion. However, it would not be within the terms of her discretionary power to call for the income if it was intended to be used to assist her children, to invest in her family trust or otherwise to make gifts to friends or charities.
Ambiguity and Extrinsic Evidence
Having ascertained the meaning of the words “as she in her sole discretion may require” in clause 6.2 from within the four corners of the will and in the light of the surrounding circumstances, it is strictly unnecessary to consider the effect of the extrinsic evidence that is permitted to be taken into account in the case of uncertainty or ambiguity.
Given the competing submissions considered above, there is certainly something to be said for the view that clause 6.2 was uncertain or ambiguous. However, even assuming that this was the case, the extrinsic evidence merely fortifies my view that clause 6.2 should be construed in the manner I have expressed. This is so notwithstanding Ms Englefield’s submission that this clause had already appeared in the 2005 will and the testator’s memoranda were written after that will was executed. The reason for their probative value lies in the fact that the testator was content for the same expression to be repeated in his last will after the memoranda had been prepared.
In his 14 November 2005 memorandum, the testator stated that under the terms of his 2005 will Mrs Marks had a life interest “in so much of the income of my estate from year to year as she needs”. He said that his wife had sufficient assets “for her to carry on and be comfortable” and mentioned the possibility that some of his assets or income might “not be needed to look after June in the future”. He expressed his wish not to “build up [Mrs Marks’] assets anymore” but “merely to be sure that the income flows to her is sufficient for her needs”. He considered the issue of Mrs Marks inheriting some of the costs for which he was then paying and assessed whether the $3,000 per month which he was then giving her would continue to be “sufficient for her needs”, and whether transferring $6,000 per month to her would, together with her own investment income, enable her to “live comfortably”. He referred to “extra requirements of money, etc, for a new car or a trip” and to Mr Marks ensuring that “income flows from my estate to June in an appropriate and sufficient stream”.
In his 18 April 2006 memorandum, the testator was anxious to ensure that Mrs Marks was “well protected and well looked after when she needs assistance”. He stated that he had told Mr Marks “that it would be quite right for my estate to lend money to June if she is spending more than the income of my estate and is short of money”. To be “fair” to his children, any such loan would have to be repaid after Mrs Marks’ death.
In his 18 April 2006 Future Financial Strategy of the J N Marks Family Group document, the testator considered the total income that would be “available to look after June”. He referred again to the possibility of a loan if Mrs Marks lived “beyond the income available” and to any such loan being repaid on her death from her assets. He continued:
She has left her estate to her three children and she has been adequately looked after during my life.
Finally, he mentioned that the possibility of “June marrying again to somebody who has sufficient funds to support her should be taken into account”.
The general import from these memoranda is that the testator was primarily concerned to ensure that the income from his residuary estate could be used to meet Mrs Marks’ lifestyle and living expenses if there was such a need. There was no suggestion that he was directing his mind to bequeathing her with a right to call for any amount that she determined without regard to her need for her lifestyle and living expenses.
This conclusion is also borne out in the evidence of Mr Marks and of Mrs Marks. In Mr Marks’ discussions with the testator in November 2005, 18 April, 1 May and 21 June 2006, what the testator had conveyed to him was consistent with the contemporaneous documents which he had prepared – that is, to ensure that Mrs Marks was able to receive income from his estate needed for her living expenses to the extent that her income from her own sources was insufficient and that he did not wish to build up her assets anymore.
Mrs Marks’ own evidence that the testator was concerned to ensure that she was looked after and taken care of and that she continued to enjoy the lifestyle she was used to lends further support to the conclusion I have reached on the construction of clause 6.2. This conclusion is not altered by Mrs Marks’ evidence that the testator did not, at any time, say to her that she could have resort to the estate income only if she needed the additional money for living expenses or a new car or an overseas trip.
Conclusion
On the basis of the foregoing reasons, I answer the questions posed in the originating motion as follows:
(a)What is the proper construction of the words “as she in her sole discretion may require” (“the words”) in clause 6.2 of the Will?
Answer:The words mean so much of the income as she needs for her personal lifestyle and living expenses which amount is up to her to decide and without her having to exhaust all of her income before she can ask for extra income. It would not be within her discretionary power to say that she needs the income when the real use of the extra income is to assist her children, to build up her asset base, to invest in her family trust or otherwise to make gifts to friends or charities.
(b)Do the words mean that the first defendant is confined to obtaining so much of the annual income of the residuary estate as she needs for the purpose of her own use as living and lifestyle expenses?
Answer: See answer to question (a).
(c)Do the words mean that the first defendant is able to obtain so much of the annual income of the residuary estate as she wants, regardless of the purpose or purposes for which she proposes to use that income?
Answer: No.
(d) Do the words have some other, and if so what, meaning?
Answer: See answer to question (a).
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