O'Brien v Warburton
[2012] WASC 82
•14 MARCH 2012
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HELEN ROWENA O'BRIEN as Executor of the Will of Jeffrey Charles Hogan -v- WARBURTON [2012] WASC 82
CORAM: EM HEENAN J
HEARD: 1 NOVEMBER 2011
DELIVERED : 14 MARCH 2012
FILE NO/S: CIV 1662 of 2011
MATTER :The Trustees Act 1962
AND
The will of Jeffrey Charles Hogan (Deceased)
BETWEEN: HELEN ROWENA O'BRIEN as Executor of the Will of Jeffrey Charles Hogan
Plaintiff
AND
KERRY JANEENE WARBURTON
First DefendantANITA-LEE HOGAN
Second DefendantJOSHUA KANE HOGAN
Third DefendantANAI TAYLA HOGAN-SMEDLEY by her Guardian ad litem MICHELE ANN KERSHAW
Fourth DefendantMARGARET VINA HOGAN
Fifth DefendantROBERT KENNETH HOGAN
Sixth DefendantMARGARET DIANNE MARTIN
Seventh DefendantKEVIN RAYMOND HOGAN
Eighth DefendantLEON RODNEY WARBURTON
Ninth DefendantJUSTIN NEIL WARBURTON
Tenth DefendantDANNIKA PAIGE WARBURTON
Eleventh DefendantLESLIE JOHN MARTIN
Twelfth DefendantCHRISTOPHER DAVID MARTIN
Thirteenth DefendantMICHAEL KENNETH MARTIN
Fourteenth Defendant
Catchwords:
Wills - Construction - Large estate - Whether legacies and devises inconsistent - Whether effective disposition of residue - Whether partial intestacy - Whether direction for postponement of sale of share in real property effective - Whether executor may distribute in specie shares and other assets - Whether right of occupation or life estate in family home conferred - Liability of occupant for rates, taxes and insurance - Whether particular portfolio of assets charged with the payment of debts and expenses - Whether executor is to make cash allowances to beneficiaries and, if so, whether such allowances should be brought to account - Meaning of expenses and travelling costs to attend funeral - Nature and extent of executor's remuneration - Administration costs - Failure to appoint guardian ad litem for one infant defendant
Legislation:
Administration Act 1903 (WA)
Wills Act 1970 (WA)
Result:
Orders and declarations answering executor's questions (see Appendix C)
Direction to apply for appointment of guardian for infant fourteenth defendant and for further directions concerning effect of proceedings on him
Category: A
Representation:
Counsel:
Plaintiff: Ms M R Bloch
First Defendant : Mr D R Kilpatrick
Second Defendant : Ms G M Anderson
Third Defendant : Ms A Q H Bolger
Fourth Defendant : Mr S K Shepherd
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Solicitors:
Plaintiff: Merle Bloch
First Defendant : Butlers
Second Defendant : Irdi Legal
Third Defendant : Lawton Lawyers
Fourth Defendant : Tottle Partners
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : Submitting appearance
Ninth Defendant : Submitting appearance
Tenth Defendant : Submitting appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Case(s) referred to in judgment(s):
Andrew v Dobson (1788) 1 Cox 425; 29 ER 1232
Carr v Carr (1987) 8 NSWLR 492, 496
Faithfull v Pine [2012] WASC 75
Foley v Cannon (1936) 53 WN (NSW) 223
Gellibrand v Murdoch (1937) 58 CLR 236
Hardiman v Beal & Morris (1956) 58 WALR 20
Hatzantonis & Anor v Lawrence; Cox v Lawrence [2003] NSWSC 914
Hulme v Chitty (1846) 9 Beav 437; 50 ER 411
In re Cartwright; Avis v Newman (1889) LR 41 Ch D 532
Long v Comptroller of Stamps [1964] VR 796
McPhail v Doulton [1971] AC 424
National Trustees Executor and Agency Co of Australasia Ltd v Murphy (1892) 14 ALT 103
Perpetual Trustee Co Ltd v Adams (1923) 24 SR (NSW) 87
Perpetual Trustee Co Ltd v Wright and Others Re Will of the late James Paul Gee Cox (Junior) Deceased (1987) 9 NSWLR 18
Re Beverly; Watson v Watson [1901] 1 Ch 681
Re Brigden [1938] Ch 205
Re Brown; Cavanagh v Cronin [1940] St R Qd 154
Re Dawes; The Perpetual Executors & Trustees Association of Australia Ltd v Dawes [1954] VLR 76
Re Gansloser's Will Trusts [1952] Ch 30
Re Keenan; Ford v Keenan (1913) 30 WN (NSW) 214
Re Redfer; Redfern v Bryning (1877) 6 Ch D 133
Re Reid [1943] SASR 254
Re Taylor; Taylor v Tweedie [1923] 1 Ch 99
Reid v Deane [1906] VLR 138
Thomson v Thomson [2008] VSC 375
Towns v Wentworth [1858] 11 Moo PC 526; 14 ER 794
Wigley v Crozier (1909) 9 CLR 425
Woodhouse v Walker (1979-80) LR 5 QBD 404
EM HEENAN J: This originating summons under the Trustees Act1962 (WA) seeks determinations or declarations in answer to 26 questions concerning the construction of the will, or matters associated with the administration of the estate, of Jeffrey Charles Hogan (dec) late of 17 Colonial Gardens, Mosman Park, who died on 8 December 2010. This is a large estate, the net distributable proceeds of which are estimated to be in the order of $30 million to $35 million. The originating summons has been issued by the plaintiff, one of the executors appointed under the will of the deceased, who is the sole grantee of probate by order of this court of 25 February 2011. The other executor, Anthony John Deakin, had renounced.
The originating summons is not, as required by Rules of the Supreme Court O 58 r 14(5), entitled in the matter of the section of the Act under which the application is made except for a general reference to the Trustees Act. No point was taken about this by any party and there is no doubt of the power of the court to determine these questions. Nevertheless, it is desirable to identify the statutory provisions conferring these powers. They include s 92 of the Trustees Act, s 45 of the Administration Act, s 16(1)(d)(ii) of the Supreme Court Act 1935 (WA) and RSC O 58 r 10.
The deceased had been born on 25 February 1958 and was aged 52 years at the date of his death. His last will was prepared by him or at his direction apparently without any legal advice or assistance. Major difficulties have arisen in determining the proper construction of the testament and, in particular, whether or not it fails fully to dispose of the testator's estate, so leaving a partial intestacy.
The precise value of his net assets does not readily appear. The administration of the estate is not complete and the process of administration may yet involve the sale or other realisation of assets which might give rise to substantial transaction costs, in the way of sale commissions and expenses and, potentially, to significant capital gains tax or other taxation liabilities. This in turn gives rise to the question whether or not the executor is entitled to distribute certain assets to named beneficiaries in specie because, if she may, that may spare the estate some of those costs and expenses.
For this and other reasons, it is not possible at this stage to determine the value of the estate available for distribution but the latest estimate contained in the evidence shows that the net value of the estate at the date of death was some $32,775,000 and, as at 12 April 2011, the estimated value of was some $39,257,000. Both figures include an amount of approximately $2.4 million to $2.6 million, being the assets of 'the J C Hogan Superannuation Fund'. There is some doubt as to whether or not this fund, or all of it, will become an asset of the estate. However, it is not necessary to determine that question in these proceedings.
In a later affidavit sworn 3 October 2011, the plaintiff filed a revised statement of assets and liabilities of the deceased which showed the then estimated value of the net assets was some $30,512,000 after making allowances for income tax liabilities of $770,560.71. The reduction in the value as shown in this more recent statement follows from a revaluation of certain of the assets and partial distributions and advances made by the executor to date pursuant to directions to make such payments contained in the will. This gives rise to another question posed in the originating summons, namely whether the recipients of some of those payments are obliged to bring them to credit against legacies or other bequests to them.
The family
Four generations of the Hogan family feature in the distributions provided for by the will. A schematic diagram of the family tree showing the relationship between the 14 defendants is set out in Appendix A.
Provision is made by the deceased for his mother, for two of his brothers and his sister and the latter's husband, the two children of the deceased and one granddaughter, and for two nephews, being children of his sister. At the time of his death Jeffrey Charles Hogan was divorced from his former wife, Rhonda Hogan, who is not a beneficiary and who is not a party to this action. He had, however, been living in an established relationship for a substantial time with Kerry Janeene Warburton, the first defendant, for whom substantial provision is made under the will but the extent of which is in issue. The deceased also provided for Mrs Warburton's three children who were treated as part of the family.
Anita‑Lee Hogan, the second defendant, and Joshua Kane Hogan, the third defendant, are the two children of the deceased by his marriage to his former wife. The second defendant, Anita‑Lee Hogan, has a daughter, Anai Tayla Hogan‑Smedley, the fourth defendant, born on 2 May 2004 and the granddaughter of the deceased. She is represented in these proceedings by her guardian ad litem, Michele Ann Kershaw, appointed by order of the court dated 25 October 2011.
The parents of the deceased are both referred to in the will. They are his mother, Margaret Vina Hogan, the fifth defendant, and his father, William Kenneth Charles Hogan, sometimes known as Kenneth Charles Hogan. The deceased's father died on 22 September 2010, that is before the death of the deceased, with the result that testamentary gifts to him have lapsed. The deceased is also survived by his two brothers and his sister. One brother, Robert Kenneth Hogan, is the sixth defendant. The deceased's sister, Margaret Dianne Martin, is the seventh defendant. In the will there is reference to Margaret Denise Hogan and also Dianne Hogan/Martin and family. It is accepted that these are references to the seventh defendant, who is known within the family as Dianne Martin. No member of the family is named Margaret Denise Martin. Her husband, Leslie John Martin, is the twelfth defendant. The deceased's other brother, Kevin Raymond Hogan, is the eighth defendant.
Mrs Warburton has three children by her previous marriage. They are Leon Rodney Warburton, the ninth defendant, Justin Neil Warburton, the tenth defendant, and Dannika Paige Warburton, the eleventh defendant.
Margaret Dianne Martin and Leslie John Martin, who have already been introduced as the seventh and twelfth defendants, have two children ‑ Christopher David Martin, the thirteenth defendant, and Michael Kenneth Martin, the fourteenth defendant, nephews of the deceased.
All of these named beneficiaries who survived the deceased are over the age of 18 years except for the deceased's granddaughter, Anai Taylor Hogan‑Smedley, the fourth defendant, born in 2004, and who, as already mentioned, is represented in these proceedings by her guardian ad litem, and the deceased's nephew, Michael Kenneth Martin, born in December 2004, the fourteenth defendant. No steps have been taken to have a guardian ad litem appointed for Michael Martin. The consequences of this omission are dealt with later.
Service of process and representation of defendants
Service of the originating process and supporting affidavits upon all defendants has been proved. The first, second, third and fourth defendants have all appeared by counsel and have been heard on this application. The eighth, ninth, tenth and eleventh defendants have filed notices or undertakings by which each has indicated that he or she submits to any order made by the court. However, no response has been received from the fifth, sixth, seventh, twelfth, thirteenth or fourteenth defendants. All of these except for the fourteenth defendant are of or above the age of 18 years and, having been served, will be bound by any decision of the court.
As for the fourteenth defendant, no explanation has been offered as to why no steps have been taken to have a guardian ad litem appointed to represent his interest. In view of RSC O 70 r 5, in the absence of any application to the court for an order appointing a guardian ad litem of the fourteenth defendant by the plaintiff, the court may appoint a guardian ad litem for him or direct that an application be made for the appointment of such a guardian ‑ O 70 r 5(3). No attention was given to such a necessity at the hearing and, in the absence of any such application, I consider that I should now direct that the plaintiff apply for the appointment of a suitable guardian ad litem for the fourteenth defendant and, once an appointment has been made, seek further directions as to the determination of these proceedings insofar as they might affect the fourteenth defendant.
In the meantime, I consider that the court should proceed to determine the issues posed on the originating summons as between the plaintiff and all other defendants except the fourteenth defendant. This determination will not, having regard to these circumstances, bind the fourteenth defendant. However, upon the fourteenth defendant having a guardian appointed and upon his guardian appearing, there will be an opportunity for the fourteenth defendant to make any submissions which his guardian may be advised to advance. Then all questions in the originating summons insofar as they affect or may affect the fourteenth defendant can be determined after he has had an opportunity to be heard by his guardian. This will result in the proceedings as against the fourteenth defendant being adjourned and left open for determination but, unfortunately, no other course is feasible.
Deceased's interests in real property
There are three separate parcels of real property owned by the deceased or in which he had an interest at the date of his death. These, and the values attributed to them in the statement of the deceased's assets, are as follows:
1.The house and land situate at and known as 17 Colonial Gardens, Mosman Park, in the State of Western Australia, more particularly described as lot 9 on plan 22787 and being all of the land comprised in certificate of title vol 2137 folio 766 ('the Mosman
Park property') registered in the names of the deceased and the first defendant as tenants in common in equal shares.
Value: $6 million. Deceased's share: $3 million
2.The house and land situate at and known as 1 Barnes Way, Success, in the State of Western Australia, more particularly described as lot 235 on plan 38446 and being the whole of the land comprised in certificate of title vol 2554 folio 410, registered in the sole name of the deceased ('the Success property').
Estimated value: $560,000 Deceased's share: $560,000
3.The land and apartment situate at and known as Unit 5304, 1 Queensbridge Square, Southbank, in the State of Victoria, more particularly described on the plan of subdivision 504017Y and being all of the land comprised in certificate of title vol 10928 folio 645 and registered in the names of the deceased and the first defendant as tenants in common in equal shares ('the Melbourne unit').
Estimated value: $2,250,000 Deceased's share: $1,125,000
At the time the will was made and until the death of the deceased, he and the first defendant, Mrs Warburton, lived together at the Mosman Park property and treated that as their home. At the date of the deceased's death two of Mrs Warburton's children, namely Justin Neil Warburton and Dannika Paige Warburton, the tenth and eleventh defendants, also lived at the Mosman Park property as the family home. Since the date of the death of Mr Hogan's death, Mrs Warburton's daughter, Dannika Paige Warburton, the eleventh defendant, has moved from the Mosman Park home to Sydney but more recently has returned and is living with her mother and brother at the Mosman Park property. It is likely that that arrangement will come to an end relatively soon.
In recent times the decision has been made to sell the Mosman Park property and, as co‑owner, Mrs Warburton has joined in this decision. At her request, the plaintiff executor has put the property up for sale and has appointed a selling agent. It is anticipated that if and when the property is sold one‑half of the net proceeds of the sale after all proper selling expenses will be paid to Mrs Warburton in her own right and the remaining half-share of the proceeds will be paid to the plaintiff as executor of the estate.
Since the deceased's death, the costs of all outgoings and maintenance for the Mosman Park property have been shared equally by Mrs Warburton and by the estate of the deceased. No rent or other occupation allowance is paid by Mrs Warburton to the estate for her occupation of the Mosman Park property.
At the time of the will and up until shortly before the death of the deceased the Success property was occupied by the deceased's mother, the fifth defendant, and his late father who, as already mentioned, predeceased him by a little over two months. The fifth defendant, Margaret Vina Hogan, has, sadly, been in ill‑health for some time and is obliged to use a wheelchair. The Success property had been modified by the deceased to make it suitable for wheelchair access. The fifth defendant continued to reside at the Success property for nearly a year after her son's death but the progress of her deteriorating health has recently made it necessary for her to move into a home where she will receive care and assistance and so to vacate the Success property. It seems very unlikely that she will be able to return. The plaintiff, as executor, is making arrangements to prepare the Success property for letting and is engaging a letting agent to seek suitable tenants.
A question in these proceedings is whether or not the fifth defendant has been left any interest in the Success property under the will and, if so, of what nature and extent.
The third defendant, the deceased's son, Joshua Kane Hogan, has expressed an interest in taking the Success property in part satisfaction of his entitlement under his father's will if it is determined that the executor is empowered to dispose of that asset in specie.
The Melbourne unit is being let to tenants under the management of a real estate agent. One‑half of the net income is being paid regularly to the estate of the deceased and the other half is being paid to Mrs Warburton as equal co‑tenant in common. Unless there is recourse to court proceedings to force a sale of the Melbourne unit, it cannot be sold without the consent of Mrs Warburton. The latest known position is that she is opposed to a sale of that unit and desires to have the interest of the estate in one‑half share of the property transferred to her in part satisfaction of her entitlements under the will. As foreshadowed, a question arises as to whether or not such a disposition by the executor is permissible.
The 'Positron Group assets'
As will be seen, the will makes reference to the deceased's assets including 100% of his 'Positron Group assets' to which he then attributed an approximate value of $25 million. All parties accept that this reference in the will refers to certain businesses which Mr Hogan operated through various entities at the time the will was made. However, since the date of the will, and it seems later in 2007, Mr Hogan sold all his interests in those businesses and in return received a cash consideration and a large shareholding in the company RCR Tomlinson Ltd in settlement of the purchase price. The estimated value of the shareholding in RCR Tomlinson Ltd held by the estate shortly before this hearing was approximately $15.795 million. Cash on hand in five cash management accounts shortly before the trial totalled approximately $3.08 million. After that sale the deceased had no interest in any of the businesses or entities which had previously operated under the umbrella name of the 'Positron Group'.
This gives rise to another question as to the effect of cl 2.5 of the will which provides that all assets identified in an earlier part of the will, including the 'Positron Group assets' are to be realised/sold at market value and the proceeds distributed in certain shares between the first defendant, Mrs Warburton, the second defendant, Mrs Anita‑Lee Hogan, the third defendant, Joshua Kane Hogan, and the fourth defendant, the deceased's grandchild, Anai Tayla Hogan‑Smedley. The question so arising is whether the other assets obtained by the deceased in exchange for the sale of the 'Positron Group assets' are to be distributed in the same way or whether that gift has been adeemed.
J C Hogan superannuation fund
As already noted, the list of assets of the deceased includes the capital of the J C Hogan superannuation fund, the latest estimated value of which is $2,600,000. Those funds are presently held by the plaintiff in her capacity as trustee of the superannuation fund, rather than as executor of the estate of the deceased. Mr Hogan left no binding nomination as to the allocation of the proceeds of the superannuation fund upon his death but it is contended by the trustee, without opposition from any interest appearing in these proceedings, that she has a discretion under the superannuation trust deed relating to the payment of those proceeds. The superannuation trust deed is not in evidence and no question directly arises in these proceedings in relation to the powers of the trustee or the entitlements of any potential beneficiary or class of beneficiaries.
It seems to have been tacitly assumed, however, that the trustee has a power of appointment of the whole of the proceeds of the superannuation fund to the estate of the deceased which, if so exercised, would increase the proceeds of the estate available for distribution accordingly. Alternatively, it may be assumed that the trustee of the superannuation fund may appoint some or all of the proceeds of the superannuation fund to beneficiaries other than the estate, in which case those proceeds would not form any part of the assets of the estate. In any event, the plaintiff has deposed that a sum of $327,000 or thereabouts will need to be paid by the superannuation fund for estimated GST and taxation liability of the fund before distribution. It is possible that that liability may be greater if the distribution of proceeds was made other than to the estate.
Interim distributions
Pursuant to powers contained in the will, the plaintiff, as executor, has already made interim distributions of estate assets in cash as follows:
(a)to the first defendant, Mrs Warburton, $ 715,000
(b)to the second defendant, Anita‑Lee Hogan, $ 615,000
(c)to the third defendant, Joshua Kane Hogan, $ 615,000
(d)an appropriation to an account held as trustee
for the fourth defendant, Anai Tayla Hogan‑Smedley, $ 102,500
$2,047,500
Questions are posed by the originating summons over whether or not each of those beneficiaries is entitled to the whole of those distributions in addition to bequests or devises made to him or her by the will or whether the 'weekly cash allowances' components of these payments should be brought to account and offset against the entitlements due to each beneficiary under the will and so treated as partial advance payments towards satisfaction of their testamentary gifts.
Other shares and assets
In several places in the will the deceased makes reference to his share portfolio but, for reasons which will appear, it was submitted that these references give rise to uncertainty. One reason for this is that at the time of the will and up until his death the deceased had a major share portfolio which he managed through his sharebrokers, Patersons Securities Ltd. However, in addition, he had other shareholdings. Uncertainty exists as to whether or not these other shares are included in references in the will to 'my share portfolio'. These other shareholdings can broadly be allocated to three categories comprising:
(a)The large shareholding in RCR Tomlinson Ltd which, as already noted, was received by the deceased in partial consideration of the sale of his assets in the Positron businesses. This shareholding did not exist at the time the will was made.
(b)Various shareholdings in companies not listed on the Australian Stock Exchange or on any other exchange. These shareholdings are listed in the latest available statement of assets and liabilities as comprising securities in six separate companies but comprising seven parcels in total, with an estimated value of in excess of $180,000. They are shareholdings in:
• Dreaden Pty Ltd
• Merredin Power Pty Ltd
• Peru Gold Pty Ltd
• Biotek Fuels Pty Ltd
• Sun Energy Ltd - Shares (in liquidation)
• Sun Energy Ltd - Options (in liquidation)
(c)There is also a series of convertible notes in:
• Golden Arm Resources Ltd
• Peru Gold Pty Ltd
• Sun Energy Ltd (in liquidation)
Only the notes in Peru Gold Ltd are believed to have value and the latest estimated value for these is $280,754. In an affidavit of the plaintiff executor sworn 3 October 2011, she deposes that Peru Gold Pty Ltd has advised its shareholders that the company will be endeavouring to list on the ASX during the next six to 12 months. If this occurs, the shares in that company held by the estate will be able to be freely sold on the open market.
Since the original statement of assets and liabilities was prepared the executor has discovered further holdings of shares and options in a company, Latin Resources Ltd, the additional options of which are estimated to be worth $33,600.
In both the second and third of these categories of shares there are individual holdings which are either worthless or of slight value (the securities in Sun Energy Pty Ltd which is in liquidation) and other holdings which the executor deposes are difficult to realise. According to the executor, these shares cannot be sold on the open market and the only practical means of dealing with them is to transfer them to beneficiaries in specie. The question, therefore, arises as to whether or not such a disposition of these assets by the executor is permissible and, if so, how such a disposition could be reconciled when the will assumes that the whole of the shareholdings will be sold and the proceeds distributed as directed.
Postponement of sale of assets
Within the share portfolio controlled by Patersons Securities Ltd is a parcel of shares in Cobar Consolidated Resources Ltd (Cobar shares). This is a large shareholding representing some 3.89% of the whole of the issued capital of that company. The current value of the parcel is estimated to be $4.925 million (the value at death $2.626 million). Since Mr Hogan's death the executor has sold 710,000 Cobar shares out of a total holding of 5,710,000 shares, leaving 5 million Cobar shares on hand. The executor is concerned that if this parcel of shares was put on the market for sale that would be likely to affect detrimentally any available selling price. Accordingly, the question arises on this originating summons as to whether, in the circumstances and consistently with the provisions of the will, she may further defer the sale of the Cobar shares or, alternatively, distribute some or all of them in specie to beneficiaries otherwise entitled to the proceeds of their sale.
Other assets
According to the latest affidavit of the executor plaintiff, the following additional assets of the estate have recently been discovered:
(a)Directors' fees due to the deceased by a company Merredin Power Pty Ltd in the amount of $43,808. A demand for payment of those fees has been made on behalf of the estate but payment had not been received on the date of that affidavit.
(b)The deceased had an interest in a racehorse called 'More Than Ready' which has since been realised for the sum of $17,500,
which has been paid to the plaintiff executor on behalf of the estate.
(c)Two more paintings in the deceased's art collection.
The structure of the will, its dispositions and inconsistencies
Because of its unconventional format, it is necessary to set out in full the terms of the last will of Jeffrey Charles Hogan (dec). It appears, verbatim, in Annexure B to these reasons. In saying that the format is unconventional does not in any way detract from its validity or effectiveness nor does it imply that anything other than the fundamental task of ascertaining the intention of the testator should be followed when construing the will and answering the questions posed by the executor.
In this particular case, it is essential that this testament should be read as a whole and that each of its particular provisions be read in that entire context. The more so is this important when answering questions posed in the summons which are affected by absences or omissions of provisions which might otherwise have been expected to have been included in a professionally drawn will such as a clause or clauses dealing specifically with the disposition of any residue of the estate or dealing with the situation which may arise if certain assets have been sold or disposed of prior to death.
The structure of the will demonstrates a personal idea which is not entirely consistent. The first three pages culminating in the attestation clause at first appear to describe and contain the entire scheme of distribution but it becomes evident that this is not so.
Dealing with those first three pages, they commence with a clause nominating the document as the will of the deceased, taking place and precedence over a previous will and identifying by name, by cl 1.1, eleven 'immediate members of my family' who are to benefit directly from his estate. These are eleven of the fourteen defendants but the twelfth, thirteenth and fourteenth defendants are not expressly named among this group although they are identified, as members of the Martin family, who are collectively to receive $500,000 in Attachment 3. No other beneficiaries are named directly or by implication in any part of the will or its attachments. Furthermore, in cl 1.1, after naming the eleven immediate members of the family who are to benefit directly from the testator's estate, the clause goes on to state that specific amounts are detailed in Attachments 1 to 4 generally which, as just noted, include the twelfth, thirteenth and fourteenth defendants.
Next, by cl 1.3, the testator provides that his 50% interest in the Mosman Park property should 'be passed on in cash to my children, Anita‑Lee Hogan and Joshua Kane Hogan, within 12 months of my death ‑ others are generally gifted as detailed in the Attachments'. This provision appears to devise the testator's 50% interest in Mosman Park only to the second and third defendants, his children, by implication equally between them.
Clause 1.3 needs to be compared with cl 2.4 and cl 2.5 which, on the face of the will, provide that certain named assets (all of the deceased's assets at the date of the will with the exception of cash at bank and items of personal property otherwise disposed of by cl 2.6.4) are to be sold, including his share in Mosman Park, and divided between the first, second, third and fourth defendants in shares of 35%, 30%, 30% and 5% respectively. Those clauses have the effect of providing that the first defendant and the fourth defendant, together with the deceased's children, the second and third defendants, share in the distribution of his 50% interest in Mosman Park. That result appears to be inconsistent with the approximate values of the moneys estimated to be payable to each of the beneficiaries set out in Attachment 3, which states that the approximate value of the moneys payable to the first, second and third defendants will be $10.4 million each and that an amount of $1.8 million will be payable to the fourth defendant, a result which is more achievable by distributing the deceased's 50% interest in Mosman Park between the second and third defendants alone.
This creates the question of whether there is, and if so what is the effect of, an inconsistency between cl 1.3 and Attachment C on the one hand and cl 2.4, cl 2.5 on the other.
The next peculiarity, already noted, is that the twelfth, thirteenth and fourteenth defendants are not named in the first three pages of the will, nor is any express provision made for them in that part of the testament except for the reference in cl 1.3 that 'others are generally gifted as detailed in the Attachments'. Yet as already noted, Attachment 3 provides for $500,000 to be paid to those three beneficiaries.
A similar anomaly is that while the Warburton children, the ninth, tenth and eleventh defendants, are mentioned in cl 1.1 as members of the immediate family meant to benefit directly from the estate, there is no other provision in the first three pages of the will making any provision for them or directing that they share in the distribution of any part of the estate. Similarly, however, the ninth, tenth and eleventh defendants are mentioned specifically in Attachment 3 as receiving, respectively, $300,000, $300,000 and $1 million, which is the only provision conferring upon them any benefit.
Similarly, although provision is contained in Attachment 3 for the deceased's brothers, Robert Kenneth Hogan and Kevin Raymond Hogan, the sixth and eighth defendants, and his mother and father (the latter who predeceased him) his mother being the fifth defendant, and while each of those persons is named as a member of the immediate family referred to in cl 1.1, there is no disposition in the first three pages of the will to any of them save for the provision in cl 2.6.2 that Margaret Vina Hogan remain in 1 Barnes Way, Success, a provision which, all the parties accept, gives to the fifth defendant a right of residence in that property.
This raises the question of whether or not Attachment 3, at least when providing for specific pecuniary amounts to be paid to the twelfth, thirteenth and fourteenth defendants and to the ninth, tenth and eleventh defendants, and also the sixth, eighth and fifth defendants, provides for effective dispositions in favour of each of those persons as beneficiaries.
The next factor which gives rise to questions is the absence of any specific reference to certain valuable assets of the deceased acquired after the date of the will. The following list may not be a complete reference to all such after acquired property but it does identify the more prominent or valuable assets and, by doing so, that is sufficient to raise and address the question which emerges. These are:
(a)the apartment at Southbank, Melbourne, with a value at the date of death of approximately $2,250,000 in which the deceased's 50% interest was $1,125,000;
(b)the deceased's total shareholding in RCR Tomlinson Ltd, the current value of which is put at $15,795,000.
(c)art work:
(i)newly discovered Aboriginal ochre 'Crocodile and Fish', $1,300; and
(ii)I Retz Hodkin 'Nude Women', $4,500.
The will does not contain, in conventional form, any clause dealing expressly with the disposition of the residue of the estate remaining after specific devises, bequests and legacies have been made and paid. This gives rise to the question of whether or not the will contains any effective disposition of the deceased's interest in the Southbank apartment in Melbourne or whether, being undisposed of, the distribution of that asset would take effect as a partial intestacy in favour of the persons entitled under s 14 of the Administration Act, in this case to be divided between the first, second and third defendants.
A similar question may arise in relation to the disposition of the shares in RCR Tomlinson Ltd although, in that regard, an anterior question arises as to whether or not the provisions of cl 2.4 and cl 2.5, read together with the arithmetic approximations contained in Attachment 3, have the effect that the shareholding in RCR Tomlinson Ltd, together with all other shareholdings whether acquired before or after the date of the will, are included in the testator's disposition of 'my share portfolio' referred to in cl 2.4 and cl 2.5.
On the question of whether or not the will as a whole, construed in its context, contains an effective disposition of the residuary estate regard must be paid to cl 2.4 and cl 2.5 to determine whether they evince an intention by the testator to dispose of the whole of his estate, not otherwise specifically disposed of in the will. If so, they would constitute an effective residuary bequest which would include his share in the Southbank apartment at Melbourne.
Attachment 1 contains a direction that cash flows of the testator's estate are to be controlled in such a way that the immediate living standards of the first, second, third, fourth and fifth defendants (and the deceased's father who predeceased him) should benefit so that their living standards are not changed until after the estate had been settled. This is echoed by the provisions of Attachment 2, which provides for weekly cash allowances to be made from the proceeds of the sale of the share portfolio to each of those five sets of defendants.
The question of whether Attachment 3 includes effective dispositions of parts of the testator's estate has already been mentioned. Similar questions arise over Attachments 1 and 2. It will be necessary to examine each of these in fuller detail later. For present purposes, it is sufficient to notice that Attachment 2 provides for a weekly allowance to be paid to six beneficiaries, five groups, one including the deceased's mother and father, in an aggregate amount of $10,000 or $520,000 per annum, to be funded from the proceeds of 'an immediate share sale … of my portfolio'.
All the parties are agreed that the provision for such weekly allowances is a valid and effective provision. The only question arising in relation to it is whether such allowances should be brought to account when calculating other amounts payable under the will to those named beneficiaries. What emerges, however, is that Attachment 2, in providing for the weekly allowances, does contain dispositive provisions by the testator in addition to those mentioned in the first three pages of the testament, although such payments can be seen as included within the reference of 'others are generally gifted as detailed in the Attachments' in cl 1.3.
In the same way, Attachment 4 contains specific provisions for the disposition of certain items in the deceased's art collection and must be regarded as containing a series of specific bequests in that respect. Again, all parties accept that Attachment 4 includes effective dispositions which form part of this will.
This demonstrates that each of the four attachments should be regarded as part of the will and as containing dispositive provisions. If this were not so, and the dispositions of the will were confined to the first three pages, no specific amounts from the estate would be payable to any of the Martin family, the seventh, twelfth, thirteenth and fourteenth defendants, or to the deceased's mother, the fifth defendant, or to the Warburton children, the ninth, tenth and eleventh, defendants. It is inconceivable that having mentioned in Attachment 3 that the tenth defendant, Justin Warburton, should be paid $1 million, the deceased did not intend any such gift to take effect because the tenth defendant was not otherwise specifically provided for by the first three pages of the will. The same observation can be made in relation to each of the dispositions in favour of the other defendants just mentioned.
Approach to construction of a will
Counsel for the plaintiff submits, and I accept, that the approach towards the construction of a will, particularly a will which may contain inconsistent or possibly repugnant provisions, should be that described by Vickery J in Thomson v Thomson [2008] VSC 375. In that case, his Honour observed as follows:
[11]No rule of construction is better settled than that the intention of the testatrix, as expressed in the will, shall prevail. The intention of the maker of the will has been referred to as the 'pole star' in a construction of wills. Thus where the intent of the testator or testatrix is obvious it should be carried out if possible.
[12]Where, however, a will contains provisions which are apparently inconsistent or repugnant, every effort must be made to construe the instrument so as to harmonise the conflicting provisions. Where such a case arises, the inconsistent clauses should be construed if possible so as to give effect to each clause. Inconsistency does not inevitably result in irreconcilability if in fact the clauses operate for different purposes. The clauses in these circumstances can be seen as complementary.
[13]Intention is sometimes made doubtful through repugnancy between several parts of the will. If two plainly repugnant intentions are then discovered, one must give way to the other.
[14]The sole question in a case of totally repugnant intentions is, of course, which clause in the will shall control the disposition of the estate. The ancient maxim that the first deed and the last will prevailed was applied to inconsistent clauses within instruments so that the former of such clauses prevailed in deeds and the latter in wills.
[15]This principle, as applied to wills, emerged as the so‑called 'rule of despair' to the effect that where two clauses in a will are irreconcilable, the last clause as it is written in the will shall prevail. Cum duo inter se pugnantia reperiuntur in testamento, ultimum ratum est. Most courts acknowledge the rationale of the rule to be that the last clause embodies the last expression of the testator's intention; or that, as between two repugnant clauses, the latter of the two should prevail on the basis that what the testator writes last in his 'last will'; or on the footing that where the clauses are entirely irreconcilable, so that they cannot possibly stand together, the clause which is last in position shall prevail, the subsequent words being considered to denote a subsequent intention.
[16]This highly technical rule, which smacks of the days when legal fictions once flourished, has been severely criticised, and is never applied, it seems except as a last resort. (footnotes omitted)
Obvious difficulties arise when parts of a will are ambiguous or, worse still, inconsistent. Such problems are often experienced in home‑made wills such as this but there is clear judicial guidance to the approach which should be taken when dealing with any such situation. In Perpetual Trustee Co Ltd v Wright and Others Re Will of the late James Paul Gee Cox (Junior) Deceased (1987) 9 NSWLR 18, 33 Bryson J cited with approval a passage from the judgment of Powell J in Coorey v Coorey (Unreported, NSWSC, 22 February 1986) that:
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 so revealed.
In the later case of Hatzantonis and Anor v Lawrence; Cox v Lawrence [2003] NSWSC 914 [10] Bryson J cited the following passage from the advice of the Judicial Committee in Towns v Wentworth [1858] 11 Moo PC 526, 542 ‑ 583; 14 ER 794, 800:
The rules of construction … do not seem open to any doubt.
In order to determine the meaning of a will, the court must read the language of the testator in the sense in which it appears he himself attached to the expressions which he has used …
When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with such intention, though not sufficient to control it, or which indicate an intention to which the law will not permit to take effect, such expressions must be discarded or modified; and, on the other hand, if the Will shows that the testator must necessarily have intended an interest to given which there are no words in the will expressly to devise, the court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has on the whole will, sufficiently declared.
This was expressly adopted and applied by Dixon J in Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404.
Other applicable authorities have recently been helpfully collected in the judgment of Master Sanderson in Faithfull v Pine [2012] WASC 75 where the learned master referred to observations in Re Taylor; Taylor v Tweedie [1923] 1 Ch 99, 105 to the effect that the words of a testator who has made his or her own Will may be considered 'less strictly than in the case where the Will is drawn by a skilled professional'.
In Re Redfer; Redfern v Bryning (1877) 6 Ch D 133 Bacon VC observed, at 136:
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 canon of construction.
Partial intestacy
There is a presumption in the construction of wills which is rebuttable and which may be weak in the face of the particular terms of testament to the effect that the court should, in doubtful cases, incline against concluding that the testator intended a partially intestate distribution of his assets. Two extracts from leading texts will suffice to describe this presumption, its varying strength and application and effect. In Halsbury's Laws of England (4th ed) vol 50 par 494, omitting footnotes, the learned authors write:
A testator may well intend to die partially intestate for, when he makes a will, he is testate only so far as he has expressed himself in his will. Accordingly, there is no reason for the court in all cases to lean too heavily against a construction which involves a partial intestacy. Where, however, the construction of the will is doubtful, a court acts on the presumption that the testator did not intend to die either wholly or even partially intestate, provided that on a fair and reasonable construction there is no ground for a contrary conclusion. Where the will shows an intention of the testator to dispose of the whole of his property, but, as regards the interests created, two constructions are possible, according to one of which the will effects a complete disposition of the whole, but according to the other the will leaves a gap, the court inclines to the former construction.
The second extract is to be found in DM Haines QC, 'Construction of Wills in Australia' (2007) Butterworths, at 3.3, 3.5, 3.6 and 3.7.
3.3The Golden Rule of construction of wills stipulates that a court should adopt an interpretation which will not lead to an intestacy or partial intestacy and which will lean towards a construction which preserves rather than destroys the gifts under a will. If a gift fails for any reason, a resulting trust arises in favour of the testator and it falls as on an intestacy. The presumption that a testator having executed a will does not wish to die intestate or to leave a partial intestacy may be used as an aid to construction if there is an ambiguity in a will. The expression 'Golden Rule' in respect of this principle was coined by Lord Esher MR in Re Harrision; Turner v Hellard (1855) 30 Ch D 390 at 393 ‑ 4. The rationale behind the rule is simple. Where a person executes a will in solemn form, it must be assumed that he or she did not intend to die intestate. Courts have taken a firm view in this regard. A court 'never inclines towards intestacy; it is a dernier ressort in the construction of wills': Lightfoot v Maybery [1914] AC 781, at 802. This proposition has the status of a presumption but may be rebutted by the context. It is rebuttable because 'the guiding principle [is] always to construe the will in accordance with the wishes of the testator' ‑ Thomas v Strickland [2001] WASC 156.
…
3.5The presumption against an intestacy has been the source of judicial criticism. It has been said that it involves speculation as to the intention of a testator. Some persons die intestate deliberately and it is very dangerous to place too much reliance on the supposed wish of a testator not to die intestate.
3.6If, however, there are two possible constructions, one of which would result in an intestacy and the other which would not, a court should adopt the latter. A presumption is said to arise in favour of a testacy rather than an intestacy because a testator went through the act of making a will.
3.7Moreover, if it is clear from the whole of the will that the testator had attempted to dispose of his or her entire property to persons who would be expected to inherit the bounty of the estate, that fact is sufficient to invoke the presumption. (footnotes omitted)
Construing the deceased's entire will in context, as I must, there are various signs which evidence an intention of the testator to dispose of his entire estate. This is apparent from cl 1.1 in which the testator refers to eleven named beneficiaries as benefiting directly from his estate 'which includes personal effects and company assets'. It is also apparent from cl 2.4 which, although not a compendious list of assets held at the date of death, comprised all the major assets at the date of the will. Even more apparent is it that the will deals with the whole of the estate's assets because of the provisions in Attachment 3 which say, 'I estimate at the time of writing this document, being my last will and testament, my worth is $38 million, less $3.5 million in personal loans … '. Consideration of that provision and the following arithmetical estimates of the values to be divided to the principal beneficiaries shows that the testator planned for the will to effect a distribution of assets worth in total approximately $36 million, which was the figure of $36 million (+/-) which he then recorded as being his approximate net worth. Furthermore, despite some imperfections, cl 2.4 and cl 2.5 taken in context demonstrate an intention by the deceased to dispose of the whole of his assets (not otherwise specifically disposed of by the will) in the proportions thereunder specified to the first, second, third and fourth defendants. I consider, therefore, that cl 2.4 and cl 2.5 should be taken to have effect as a general residuary bequest and so to include all other assets not specifically or implicitly identified in the remaining portions of the will and, as such, to include the apartment at Southbank in Melbourne.
However, I do not regard the RCR Tomlinson Ltd shares as part of the assets not otherwise disposed of by the will because I consider that the term 'my share portfolio' in cl 2.4 refers to all shares on hand by the deceased at the date of death and hence to provide for the manner of distribution of that particular parcel. However, this is not a matter of any ultimate great significance because whether or not the RCR Tomlinson Ltd shares form part of the assets specifically mentioned by cl 2.4 or form part of an otherwise unidentified residuary estate, the effect will be the same, because they form part of all the assets devolving under cl 2.4 and cl 2.5 of the will to the same beneficiaries, the first, second, third and fourth defendants, in the proportions there mentioned.
Disposition of the deceased's interests in Mosman Park
A major issue between the parties is how the will provides for the disposition of the deceased's interest in his one undivided half‑interest in the house and land at Mosman Park. As already noted, cl 1.3 purports to advance a wish by the deceased that the testator's 50% share in that asset be passed on in cash to his two children, the second and third defendants, within 12 months of his death. By contrast, cl 2.4 and cl 2.5 include the deceased's 50% interest in Mosman Park as one of a group of assets later to be realised and the proceeds divided between the first, second, third and fourth defendants in the shares of 35%, 30%, 30% and 5% respectively.
The first defendant submits that the interest should devolve pursuant to cl 2.4 and cl 2.5 of the will, which would result in her obtaining a 35% interest in the net proceeds (in addition to the 50% interest in Mosman Park which she already holds in her own right), whereas the second and third defendants submit that the whole of the 50% interest of the deceased in Mosman Park should devolve equally to them under cl 1.3 of the will, so that they would obtain 100% of that half share equally between them instead of the 60% share which they would take if its disposition was controlled by cl 2.4 and cl 2.5. It is to be noted that on the approach taken by the second and third defendants that the fourth defendant would not in any way share in the distribution of the proceeds of the deceased's interest in Mosman Park.
Submissions have been made for the first defendant that cl 1.3 is precatory only and, further, that it contemplates a sale of the deceased's interest in Mosman Park within 12 months of his death, which is potentially inconsistent with the right of residence given to the first defendant in that interest and which could not, in any event, be achieved without the consent of the first defendant to sell the whole of the property (unless of course she were to be the purchaser of the deceased's half interest). There are also the concluding words of cl 1.3 which contemplate other gifts, counsel for the first defendant submitting that other gifts of the interest in Mosman Park, and to be made to others as detailed in the attachments.
The question which therefore arises is whether there is an actual inconsistency in relation to the disposition of the deceased's interest in Mosman Park as between cl 1.3 on the one hand and cl 2.4 and cl 2.5 on the other. To conclude that there is such an inconsistency would be to accept that the testator had, wittingly or unwittingly, intended to make two dispositions providing for different distributions of his share in the one asset. If that is so, it would be the only occasion in the will where such a double distribution had been attempted.
The view propounded by the first defendant would treat cl 1.3 as preliminary only and containing a declaration of intent about the timing of the desired distribution without it being obligatory and also as accommodating subsequent specific provisions conferring benefits on others in respect of that and other assets. Taking that approach would recognise cl 2.4 and cl 2.5 as being the principal dispositive clauses of those parts of the estate not otherwise specifically disposed of. The reference in cl 2.4 to the deceased's interest in the property at Mosman Park may be an indication that he had not intended otherwise to dispose of that interest. However, this other approach is less consistent with the arithmetical approximations contained in Attachment 3 which, so far as the disposable capital of the estate is concerned, assume an equality of benefit as between the first, second and third defendants.
If the second and third defendants were intended to receive the whole of the deceased's interest in Mosman Park then the smaller share in the residuary estate which each receives under cl 2.5 would mean that there would still be approximate equality in distribution of the residuary estate of the deceased as between the first, second and third defendants because of the first defendant's greater share of 35% under cl 2.5. This will still be the approximate (but not the precise) position after taking into account the distribution of the cash at bank ($870,000 at the date of death) equally between the second and fourth defendants under cl 2.6.4.
Significantly, the interests of the fourth defendant in the residuary estate (excluding Mosman Park) is stated to be 5% of the residue plus half the cash at bank. This means that for her to obtain the $1.8 million contemplated in Attachment 3 the residue, after all other dispositions, would need to be a minimum of $27.3 million (cash of $435,000 + 5% Residue = $1.8 million \ Residue must be $27.3 million). On the figures available at the dates of the will and at death, that would still broadly be within the deceased's approximations. If the residue were to be $33 million (that is by including the estate interest in Mosman Park) the fourth defendant's share would be approximately $2.085 million.
I consider that the better view is that cl 1.3 is intended to make full provision for the disposition of the deceased's interest in Mosman Park. The deceased's interest in that asset covered by cl 2.4 and c 2.5 is inconsistent and repugnant to the overall plan of distribution apparent from the entire will. Clause 2.4 should be read and construed so that no disposition of the estate interest in Mosman Park is effected by it.
Attachment 3
I have already noted and rejected the submissions advanced on behalf of the first defendant that Attachment 3 has no dispositive effect because, so it was contended, it is precatory, inconsistent with cl 1.1 and cl 2.5. I have also set out that one of the prominent reasons for rejecting that submission is the existence of the provisions in Attachment 3 of monetary dispositions or estimates of benefits totalling $3 million to be shared in various proportions between the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth defendants. Unless effect is given to those provisions as having dispositive effect, none of those defendants would receive anything under the will, notwithstanding that the fifth, sixth, seventh, eighth, ninth, tenth and eleventh defendants are specifically named in cl 1.1 as being members of the immediate family of the deceased who are to benefit directly from his estate. It is anomalous that the twelfth, thirteenth and fourteenth defendants are not expressly included among the list of immediate family referred to in cl 1.1, but they are gathered in by Attachment 3 as being members of the Dianne Hogan/Martin & family group. Accepting, therefore, that Attachment 3 is intended to contain part of the dispositions intended by the testator in this will, the question turns as to what it means and how it takes effect.
The view which I prefer is that the latter part of Attachment 3 dealing with the $3 million and mentioning the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth defendants operates to grant to each of them specific legacies in the amounts specified. That concluson has the advantage of simplicity and certainty and is consistent with an intention to benefit named members of the family notwithstanding that the members of the participating group extend beyond the individuals expressly mentioned in par 1.1 In that regard, I consider that Attachment 3 should be treated as supplementary to cl 1.1 when it comes to identifying particular beneficiaries.
If that conclusion is adopted, what is the effect of the earlier part of Attachment 3? That provides that it was the testator's wish that the moneys, representing the whole of his estate, should be divided as there follows and then, with reference to the first, second, third and fourth defendants, appear the figures (approximate only) showing the respective entitlements as $10.4 million plus the first defendant's 50% share of the Mosman Park property, $10.4 million for each of the second and third defendants, and $1.8 million for the fourth defendant.
Conspicuously, those four defendants are the same four who are to be the recipients of all the assets referred to in cl 2.4 to be shared between them in the proportions set out in cl 2.5. However, the proportions in cl 2.5 do not follow the estimated proportions and the monetary amounts in the first part of Attachment 3. The figures in the attachment contemplate equality instead between the first, second and third defendants with the fourth defendant taking approximately 5% ($1.8 million/$33 million x 100) of the amounts distributable among those four.
The lack of correspondence between the proportions for sharing of benefits between those first four defendants as contained in cl 2.5 when contrasted with the proportions to be inferred from the monetary amounts in the first part of Attachment 3 is not great but it does exist. It is that lack of correspondence which causes counsel for the first defendant to maintain the submission that Attachment 3 has no dispositive effect and it is that same lack of correspondence which causes counsel for the plaintiff, second, third and fourth defendants (but to varying extents and in slightly different ways), to contend that Attachment 3 has a dispositive effect operating as a disposition of the whole of the estate or, alternatively, of the residuary estate after specific bequests contained elsewhere in cl 2.6.4 take effect.
Additional difficulties and complexities in considering the submissions as to the effect of Attachment 3 arise because of the different approaches taken by the parties to the fate of the deceased's one undivided half share interest in the Mosman Park property. The plaintiff, the second, third and fourth defendants submit that on termination of the right of occupation for the first defendant, the deceased's one undivided half share interest in the Mosman Park property is to be realised and the proceeds divided equally between his children, the second and third defendants, thus giving effect to cl 1.3 of the will and removing the interest in the Mosman Park property from any participation in distribution under cl 2.4 or cl 2.5 of the testament. The first defendant, as already noted, has submitted that the deceased's interest in the Mosman Park property should be distributed in accordance with cl 2.5 of the will in which she, the two children and the granddaughter share in shares of 35%, 30%, 30% and 5% respectively. The resolution of that issue affects the shares which the first, second, third and fourth defendants each take under the will and, depending upon the eventual net value of the estate available for distribution, has the potential to displace the approximate equality of benefits as between the first, second and third defendants assumed in Attachment 3.
It is also the case that Attachment 3 proceeds on the premise, admittedly an approximation by the deceased, that the net value of his estate available for distribution was slightly more or less than $36 million, so that on the figures contained in Attachment 3 the first four defendants would share in the distribution of $33 million and the remaining ten defendants would share in the balance of $3 million. That gives rise to the question of what is the effect if the net value of the estate available for distribution were to be significantly more or less than the $36 million postulated in Attachment 3. If it were more, how would the surplus be divided, if it were less who would bear the shortfall?
These considerations led the second, third and fourth defendants, and supported to some extent by the plaintiff, to submit that Attachment 3 should be regarded as itself containing comprehensive details for the distribution of the whole estate not otherwise disposed of - that is, all the deceased's property except for that referred to in cl 2.6.4 of the will. The submission, so advanced, is that Attachment 3 evidences a plan of disposition in which the first four defendants would receive between them (in designated shares) eleven‑twelfths of the net value of the residuary estate (that is, thirty‑three thirty‑sixth shares) and that the remaining ten defendants would receive among themselves one‑twelfth share (three thirty‑sixth shares) of the net distributable value of the residuary estate to be shared between them in the proportions that the figures in the second part of Attachment 3 bear to $3 million.
According to these defendants, this suggested plan of distribution will readily accommodate a situation in which the net value of the distributable residue is more or less than the assumed $36 million nominated by the testator as his approximate net worth. However, some of the defendants, as an alternative or substitute submission, advanced the proposition that the first $33 million of the net distributable residue should be shared among the persons named in Attachment 3 in proportion to the figures appearing in that schedule but that any surplus over $36 million should be distributed in accordance with cl 2.5 of the will.
One of the factors which bears on the approach to the consideration of these submissions as to the effect of Attachment 3 is the approximate character of the estimate of the overall value of the net distributable estate. Plainly enough, the amount of the residue of the estate available for distribution will depend on the market values of the various assets on the dates of realisation of them. They may or may not clear $36 million but market value fluctuations are not the only uncertainties which apply to estimating the net distributable value of the estate.
Most obviously, cl 2.4 includes the deceased's interest in Mosman Park as one of the assets mentioned, but for reasons already given this must be regarded as inconsistent with the will as a whole and rejected in favour of the view that cl 1.3 effectively disposes of the deceased's interest in Mosman Park to the second and third defendants.
The other assets listed in cl 2.4 of the will and in the financial statements contained in the plaintiff's affidavits include, without confirming that it is an estate asset, the value of the deceased's superannuation fund which, as at 28 September 2011, was put at $2.66 million and, at the date of death, $2.6 million. However, the evidence is that the superannuation trustee has not yet made any decision or allocation as to the entitlement to the benefit of that fund and it may or may not become an asset of the estate. Similarly, the financial statements show as an asset of the estate an AMP Super Savings account of $813,000 which, so I was informed by counsel without objection, represents the entire proceeds of the deceased's life insurance mentioned in cl 2.4 of the will, to which he had attributed a value of $2 million.
It must follow from these considerations, if it is not otherwise sufficiently obvious, that insofar as Attachment 3 of the will identifies money amounts expected by the deceased to be received by the first, second, third and fourth defendants for whom, earlier in the will, specific provision had been made by cl 2.5 for the receipt of specified shares in the proceeds of the sale of designated assets, those figures in Attachment 3 can only be broad estimates. The final value of the net distributable estate will depend upon a number of variables already identified. I regard this factor as illustrating that the figures, for the first, second, third and fourth defendants, in Attachment 3 and the aggregate value of the net distributable estate are very prone to change. Because of that, they do not appear to provide a firm foundation for concluding that eleventh‑twelfths (thirty-three thirty-sixths) of the net distributable estate was meant to be shared between the first, second, third and fourth defendants.
On the other hand, I must consider the effect of the second part of Attachment 3, providing for specified sums totalling $3 million as the approximate moneys to be divided between the fifth to fourteenth defendants inclusive. It was advanced by counsel for each of the defendants, in various ways, that there would appear to be little justification for treating the amounts contained in the first part of Attachment 3, that is for distribution among the first four defendants, as being different in character, status or effect from the amounts mentioned in the second part to be shared between the fifth to fourteenth defendants inclusive. There is force in that submission and one would not expect to find a different meaning or to give different interpretations to some parts of the same clause or Attachment where to do so would, or might, produce inconsistent consequences.
However, this testament is not a model of consistency. I have already noted the apparent inconsistency between cl 1.1 and Attachment 3 when it comes to the identification of beneficiaries. There is also the inconsistency between cl 1.3 on one hand and cl 2.4 and cl 2.5 on the other in relation to the disposition of the estate interest in the Mosman Park property. Undoubtedly, there is an inconsistency, although to a relatively small degree, in the numerical consequences which would result from distributing the assets mentioned in cl 2.4 in the manner provided in cl 2.5 when compared with the estimated monetary results of distribution assumed in the first part of Attachment 3.
There is no escape from these inconsistencies. They must be recognised and a construction given to the will as a whole read in context and in identification of the testator's intentions, reconciling if possible the inconsistencies. If that cannot be done, one must accept certain dispositive provisions as more persuasively representing the testamentary intent than other inconsistent provisions which must, therefore, be rejected. I have already said that I do not consider there can be any escape from the conclusion that the second part of Attachment 3, in dealing with specific amounts to be distributed to the fifth to fourteenth defendants, must be regarded as having dispositive effect. There is no provision in the will directly inconsistent with such a construction and this construction produces the result that all of the beneficiaries mentioned in cl 1.1 receive a benefit under the will. If that were not to be done, then none of the fifth to fourteenth defendants would receive anything other than such weekly cash payments as may be paid to the fifth defendant under the provisions of Attachments 1 and 2.
To the objection that the twelfth, thirteenth and fourteenth defendants are not specifically named in cl 1.1, I consider the answer to be that they are named, in the sense of being included in the family of the seventh defendant, in Attachment 3 and that in proper context the reference to Margaret Denise Hogan (the misdescription of the seventh defendant) in cl 1.1 should be seen as including her husband and children. On that approach, there is nothing else in the will, including the Attachments, which would deny, or be inconsistent with, monetary dispositions to the fifth to fourteenth defendants as mentioned in Attachment 3. They are, therefore, an integral part of the testamentary scheme and, standing alone as they do (in the sense that they are not duplicated or contradicted by any other provision in the testament) there is every reason to treat them as specific legacies.
Another consequence of treating them as specific legacies is that it renders the benefits to be derived by each of those beneficiaries as certain and free from any effect or influence which might result from variations in the net disposable value of the residuary estate or uncertainties over whether or not the superannuation fund assets will become part of the estate.
Different factors, however, apply to provisions in Attachment 3 estimating the amounts divisible between the first to fourth defendants. I have already drawn attention to the uncertainty and approximate nature of those estimates, dependent as they are upon market valuations and realisations of estate assets in the course of winding up the estate. Acceptance of the submission that eleven‑twelfths of the net disposable residuary estate should be paid to the first, second, third and fourth defendants on the basis of equality between the first three defendants and a much smaller share to the fourth defendant unquestionably would result in an inconsistency with the terms of cl 2.5 of the will. Accepting that there would be such an inconsistency and that it is incapable of reconciliation, which provision should have effect?
In my view, cl 2.4 and cl 2.5 contain the true indication of the testator's intent with respect to the distribution of the assets listed in cl 2. except for the estate interest in Mosman Park. For reasons given elsewhere, these clauses should also be regarded as containing the testator's intentions for the disposition of his entire estate except to the extent that there are other dispositions of his assets contained in the will such as those appearing under cl 1.3 and cl 2.6.4. Clause 2.4 and cl 2.5 are, also for the reasons previously given, apt to avoid the consequence of a partial intestacy. There are many indications in the will as a whole of the intention to dispose of the entire estate and it is to be noted that such a testamentary intent is implicit in the submissions of the plaintiff and all the defendants except the first defendant.
The dispositions of the residuary estate contemplated by cl 2.4 and cl 2.5 of the will are better suited to deal with a situation where the value of the estate may increase or decrease beyond the expectations of the testator at the time of the will and the formulation of his approximations as set out in Attachment 3. Clause 2.4 and cl 2.5 are also better suited to deal with the situations which have occurred, namely that certain assets of the deceased were disposed of by him before death so that provisions relating to them have resulted in ademption of those gifts, and that other assets, for example, the Southbank apartment at Melbourne, have been acquired. Nor, on this construction, will the proportionality of the division of the assets between the first four defendants be affected by the resolution of uncertainties over whether or not the benefit of the superannuation fund becomes an estate asset or the accuracy of the deceased's estimate of the realisable value of certain assets such as the insurance policy or his shareholdings. Clause 2.4 and cl 2.5, if read in this way, as providing for comprehensive dispositions of the residue, are flexible and adaptable to deal with the changing value of estate assets over time and the changing composition of estate assets. They provide a firm and certain basis for distribution of the residue.
By contrast, the provisions in the first part of Attachment 3 are highly dependent upon the value of the distributable estate being at or near $36 million and unless they are treated to be indicative of proportional entitlements (which is not the language used) there is no obvious mechanism for dealing with a situation where the net distributable value of the estate may be more than $36 million. By contrast with the provisions in Attachment 3 for the fifth to fourteenth defendants inclusive, the provisions for the first four defendants in that attachment provide an alternative but inconsistent method of dealing with the entitlements of the first to fourth defendants. I do not consider that, upon the proper construction of this will, the references to the first, second, third and fourth defendants in Attachment 3 are intended to be or are dispositive but, rather, are no more than indications of estimates of the consequences of giving effect to other provisions in the will, including cl 1.3, cl 2.4 and cl 2.5. If, however, that is not the case and there is a direct inconsistency between cl 2.4 and cl 2.5 on the one hand and the provisions in Attachment 3 dealing with shares in the estate by the first, second, third and fourth defendants, then I consider that those parts of Attachment 3 dealing with those defendants should be disregarded because of the inconsistency and that cl 2.4 and cl 2.5 should be accepted as representing the proper expression of the testator's intent.
Questions posed by originating summons
Having determined the principles applicable to the construction of the will and having addressed and determined the major structural issues and contentions concerning the will and its effect, it is now possible to address the particular questions posed by the originating summons. These are grouped in the headings tabulated in the originating summons.
Question A: Directions For sale
The questions are:
A1Does the Will preclude the Plaintiff (the Executor) from postponing the sale under s 27(1)(c) of the Trustees Act?
A2Does the Will preclude the Plaintiff from making any in specie appropriation of shares or other estate assets?
A3If the Plaintiff may make in specie appropriations, at what date is the value of the property to be determined for that purpose?
The first of these questions arises because of language used by the testator in the will suggesting or implying early sale or realisation of particular assets. These references are as follows:
(a)Clause 1.3 'passed on in cash' - with reference to the Deceased's 50% interest in the Mosman Park property
(b)Clause 2.5 'realised/sold at market value and cash or assets divided up'
(c)Clause 2.6.3 'the assets are sold/cashed in … and remaining cash is distributed
(d)Attachment 2 'an immediate share sale is to be made … provide cash for … '
(e)Attachment 3 'these moneys … be divided'
By her counsel, the plaintiff submits that by the words used in cl 1.3 the deceased contemplated that the Mosman Park property would be sold although the sale would be postponed until the first defendant permanently vacated it and that, accordingly, there is no restriction upon the statutory power to postpone the sale of an estate asset. Counsel for each of the first, second, and third defendants support that construction. The fourth defendant did not file separate written submissions but on this question and most others adopted the submissions of the second and third defendants.
With reference to cl 2.5 and the provision relating to the sale at market value of the assets there listed, it is to be noted that those assets include the share portfolio, the Positron Group assets (which had been sold before the date of death) and the Success property. They also include the deceased's life insurance and the superannuation fund. It is not appropriate to speak of the sale of the superannuation fund or of the life insurance policy as opposed to their realisation. I consider that the language employed by the testator in cl 2.5 and cl 2.6.3 directing that these assets be realised/sold at market value or the assets are sold/cashed in is no more than a conventional direction to the executor to collect or realise these assets at the executor's discretion and to apply the proceeds as directed in the will. There is nothing to suggest that an immediate sale or an exclusion of the statutory power to postpone a sale is directed by that language.
Insofar as Attachment 2 provides for an immediate share sale, I am satisfied that this is an indication to the executor that all immediate funeral and travelling expenses, the repayment of loans and the payment of legal and accounting expenses, together with the weekly cash allowances to the named beneficiaries totalling $10,000 per week should be sourced from proceeds of the sale of some or all of the share portfolio. The share portfolio constitutes a readily negotiable source of assets which can quickly be realised to provide cash flow for any pressing expenses. Resort to that asset for liquid funds (accepting that the cash at bank has been specifically allocated for the second and fourth defendants) can be effected more easily than the sale of any of the real property and, for that reason, has been identified by the testator as the asset of first resort to provide funds for the satisfaction of these payments. Nothing in this suggests or requires that the whole of the portfolio should be sold immediately or that the statutory power to postpone the sale has been excluded.
In Western Australia, by virtue of s 27(1)(c) of the Trustees Act the power to postpone the sale of a trust asset includes the power to postpone the sale of assets regardless of whether or not they are of a wasting, speculative or reversionary nature but, in the case of property of a wasting or speculative nature for no longer than is reasonably necessary to permit its prudent realisation. This is in contrast to the power in some other jurisdictions which does not permit the postponement of the sale of assets of that speculative or wasting character. The obligation of the trustee where there is a power to postpone sale or to retain has been described in Ford & Lee, Principles of the Law of Trusts at [12,180] as follows:
Where the duty to sell is accompanied by a power to postpone sale or a power to retain the property the duty is to sell at a fair price within a reasonable time. In Brown v Gellatly (1867) LR 2 Ch App 751 the duty of trustees is for sale with a power 'to realise when and in such manner as [the trustees] may see fit' was held by Cairns LJ at 759 to impose on them a duty to convert the assets 'at the earliest moment at which they could properly be converted'. In Re Crowther [1895] 2 Ch 56, Chitty J described the effect of a power to postpone sale at 61:
'For myself I cannot see, if a testator says that his trustees may postpone the sale for as long as they deem expedient, how this gives them only some undefined and limited power of postponement, and there is nothing in any of the authorities which have been cited which compels me to come to such a conclusion.'
The learned authors then examine a series of other authorities which emphasise the power of trustees to postpone the sale of assets, even those investments which fall in value, so long as the discretion is exercised in good faith and carefully with reference to relevant considerations. Bearing in mind that these are the criteria to be considered by the executor in deciding whether or not to postpone the sale of this estate's assets, there is nothing in the terms of the will or in other considerations to conclude that this power of postponement of sale has been excluded or modified by the terms of the testament.
The answer to question A(1) must therefore be 'No'.
With reference to question A(2), whether the will precludes the executor from making any in specie distributions of shares or other assets, the position of the executor is that the will requires her to sell the Mosman Park property to realise the deceased's 50% share in that property and that the will requires her to sell sufficient shares from the share portfolio to make payments of debts, weekly allowances and administration costs but otherwise permits the appropriation of assets of the deceased's estate in specie. The first defendant substantially adopts the same position except to contend that, by virtue of cl 2.5 in the will, it is contemplated that the assets the subject of the residuary disposition, or some of them, may be 'divided up' notwithstanding that the earlier wording of that clause directs that they should be realised/sold at market value.
Question I: Identity of beneficiaries
The questions posed by the originating summons under this heading are:
I1Is Dianne Hogan-Martin referred to in aAtachment 3, the seventh defendant (the deceased's sister)?
I2Is Margaret Denise Hogan, referred to in cl 1.1, the seventh defendant?
The plaintiff submits that the person referred to in the will under these names is the seventh defendant, whose correct name is Margaret Dianne Martin (nee Hogan).
The court will not allow a gift to fail because of misdescription or erroneous description of the identity of the beneficiary if, otherwise, the identity of the intended beneficiary can be satisfactorily ascertained. If, however, there is no person actually meeting the description of the person referred to in the will and several persons to whom it may apply with more or less accuracy and nothing to distinguish, a gift will fail because of uncertainty (see Theobald On Wills (17th ed) [24‑010] and Andrew v Dobson (1788) 1 Cox 425; 29 ER 1232. The learned author then proceeds to give many examples of how, despite erroneous descriptions of intended beneficiaries, the true identity of the intended beneficiary can be established and effect given to it.
The deceased's sister was born Margaret Dianne Hogan and on her marriage became Margaret Dianne Martin. She is known generally within the family as Dianne. There is no other person to whom the reference Margaret Denise Hogan referred to in cl 1.1 of the will could refer and, similarly, the reference to Dianne Hogan/Martin in Attachment 3 is a reference to the same person, the seventh defendant.
The answers to these questions are:
I1Yes.
I2Yes.
Question J: Gift to Dianne Hogan/Martin and family
The question in the originating summons is:
J1To whom is the gift in Attachment 3 described as Dianne Hogan/Martin and family to pass and in what proportions?
This is the gift of $500,000 contained in Attachment 3. Mrs Martin, the sister of the deceased, is married to the twelfth defendant and has two children, the thirteenth and fourteenth defendants. Other pecuniary gifts are contained in Attachment 3 for the two brothers of the deceased, the sixth and eighth defendants. Each of them is to receive $300,000. There is, therefore, scope for an inference that the $500,000 payable to Dianne Hogan/Martin and family is comprised of a gift of $300,000 for her and $100,000 for each of her children, but there is no evidence to support this and such a conclusion would exclude any component for the twelfth defendant. An alternative approach is to identify the beneficiaries referred to by that name who, I am satisfied, are the seventh, twelfth, thirteenth and fourteenth defendants and to treat the gift of $500,000 as a gift to all of them as tenants in common in equal shares on the principle that equality is equity - McPhail v Doulton [1971] AC 424, 451; Hulme v Chitty (1846) 9 Beav 437, 443; 50 ER 411, 414
On this question, the plaintiff submits that the gift is to the seventh defendant and that if she had predeceased the deceased, a gift to her husband and children. The contention underlying that proposition is that the words of the gift are to 'Dianne Hogan/Martin & family' and that the 'slash' (/) suggests a succession of gift and not a concurrent gift, whereas the ampersand sign between 'Martin & family' suggests a concurrent gift.
The first defendant submits that no such alleged gift is valid because Attachment 3 has no operative effect. This is a repetition of the second defendant's submissions relating to Attachment 3 being ineffective, internally inconsistent, precatory in nature and inconsistent with cl 2.5 which is said to be the primary dispositive clause of the will and also inconsistent with cl 2.6.4. I have already rejected that submission for reasons earlier given and I am satisfied that Attachment 3 does contain dispositive dispositions, including the pecuniary provisions made to the seventh, twelfth, thirteenth and fourteenth defendants.
The third defendant submits that this gift is a gift to Dianne Hogan/Martin and her family collectively and that agreement should be obtained from each of those four defendants to authorise the seventh defendant, Mrs Martin, to distribute any share of the gift as she thinks fit. While that may be a desirable precaution, it does not determine the entitlement to the gift as provided by the will. The persons comprising the class of Dianne Hogan/Martin and family must be members of that class as existing at the date of death and so the class is readily identifiable as the four defendants already mentioned.
The identity of these beneficiaries must be determine by construing the reference to the donees in context. Hence a reference to Dianne Hogan/Martin and family connotes some limitation in the word 'family' distinguishing it in this setting from a wider meaning of 'family'. I consider that in this setting the reference to 'family' means the immediate family of Dianne Martin, including her husband and children. Generally speaking, a reference of a gift to 'relations' or to 'family' is construed as a reference to relatives who would take under present intestacy laws ‑ see Re Brigden [1938] Ch 205. This must be regarded only as an indicative guide, the true meaning of a description of a donee remaining to be ascertained from the context and relationship of a person or class of persons to the donor. However, in circumstances where the courts have considered gifts to family or to relations who have been identified by this approach, the relatives in question will ordinarily take (jointly or in equal shares per capita) - see Re Brigden and Re Gansloser's Will Trusts [1952] Ch 30.
Accordingly, I consider that in the context of this will the gift of $500,000 to Dianne Hogan/Martin and family means a gift of that amount to the seventh, twelfth, thirteenth and fourteenth defendants as tenants in common in equal shares. The answer to this question therefore is:
J1To the seventh, twelfth, thirteenth and fourteenth defendants as tenants in common in equal shares.
Question K: Legacies or an interest in residue
The questions posed under this heading in the originating summons are:
K1Are the gifts in Attachment 3:
(a)legacies; or
(b)a disposition of residue; or
(c)a combination of both?
This question has largely been addressed earlier in these reasons but I shall record the particular submissions made by the parties.
As already noted, the first defendant submits that the provisions of Attachment 3 have no effect. The second defendant submits that Attachment 3 is valid and effective but that the gifts of fixed amounts to the minor beneficiaries (meaning the fifth, sixth, seventh, eighth, ninth, tenth and eleventh defendants) are bequests of proportions of the net asset pool at the date of distribution of the estate in the same proportion as $3 million is to the value of the estate in Attachment 3 or, in other words, a series of gifts amounting in total to one‑twelfth share of the net value of the estate available for distribution (one‑twelfth equalling the proportion between $3 million and $36 million, which in turn is the sum of the approximate distributions envisaged by Attachment 3) to be shared among those defendants in the proportions signified by the specific amounts in Attachment 3. That is, one share of one‑sixth; five shares each of one‑tenth; and one share of one‑third, each of one‑twelfth of the divisible estate. In other words, the second defendant submits that the provisions for the fifth to the fourteenth defendants in Attachment 3 are not legacies in the amounts stated in that attachment but are gifts of shares in one‑twelfth of the net value of the estate in the proportions which each amount bears to the amount of $3 million. The third defendant supports the second defendant's submissions.
The plaintiff's submits that the provisions of Attachment 3 dispose of the residue of the deceased's estate (after the specific gifts are made) and that the implied intention of the deceased was that if his residuary estate was worth $36 million at the date of death, then the fifth to fourteenth defendants would share in $3 million in the stated proportions.
The submissions on this issue also raise the question of whether or not there is a partial intestacy. Such a partial intestacy might arise because of the failure to include any specific reference to the Southbank apartment at Melbourne and also, according to the first defendant, because of the invalidity or inefficacy of Attachment 3. On this point, the position of the second and third defendants is that they contend that any assets not otherwise disposed of in the will are to be divided as to 35% to the first defendant, 30% to each of the second and third defendants, and 5% to the fourth defendant. The plaintiff and the second and third defendants submit that this is the effect of Attachment 3 and that Attachment 3 disposes of the estate of the deceased not otherwise dealt with by the will. The further submission of the plaintiff in this regard is that it does not strain the interpretation of the will to treat Attachment 3 as dealing with the whole of the deceased's estate except as specifically given in the will.
For reasons previously set out, I am satisfied that Attachment 3 is intended to have dispositive effect because, otherwise, despite the testator's declaration in cl 1.1 that it is his express wish that each of the first eleven defendants should benefit directly from his estate and that the specific amounts are detailed in Attachments 1 to 4 generally, if one were to disregard Attachment 3 there would be no provision for any of the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth or fourteenth defendants.
I have already singled out the incongruity which would result if just one of those defendants, the tenth defendant, Justin Warburton, were to be regarded as receiving no specific provision under the will despite the fact that he is noted in Attachment 3 as receiving $1 million. I have also earlier noted that those portions of Attachment 3 which indicate the approximate benefit to be received by the first, second, third and fourth defendants appear to be consistent or reconcilable with the effects of cl 2.5 of the will, taken in conjunction with other benefits payable to those beneficiaries, including the entitlement to cash at bank of the second and fourth defendants.
Taken in the entire context of the will, I consider the proper construction is that the specific amounts identified in Attachment 3 as payable to the fifth, sixth, seventh, eighth, ninth, tenth and eleventh defendants take effect as pecuniary legacies payable to each of those defendants. The provisions in Attachment 3 relating to the approximate value of the moneys divisible between the first, second, third and fourth defendants should be treated as the testator's estimate of the approximate benefit which each of those defendants will receive in distribution under the will by virtue of the operation of cl 2.4 and cl 2.5 taken in conjunction with other specific gifts in favour of the second, third and fourth defendants deriving from the gifts the estate interest in Mosman Park and the gifts of the cash at bank.
Again, as previously explained, I consider that in the context of this will it is clear that the testator intended to dispose of the whole of his estate and not to leave a partial intestacy. Consistently with the language of the testament, that result can be achieved by treating, as I think they should be treated, cl 2.4 and cl 2.5 of the will as constituting the disposition of all of the estate assets on hand at the date of death except for other gifts specifically mentioned in the will, including the Attachments. Within that excepted class is the interest in Mosman Park, and what I have termed the specific legacies payable to the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth defendants totalling the $3 million referred to in Attachment 3.
Accordingly, the answers to questions K1(a) to (c) in the originating summons should be as follows:
K1(a)The gifts in Attachment 3 of specific amounts totalling $3 million in the shares there set out to each of the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth defendants are specific legacies.
K1(b)The provisions in Attachment 3 of approximate amounts distributable to the first, second, third and fourth defendants are estimates of the aggregate amounts distributable to those defendants under the combined effects of cl 1.3, cl 2.5 and cl 2.6.4 of the will and disregarding the total of any weekly cash allowances paid to them under Attachment 2. To the extent that these estimates reflect entitlements under cl 2.5 of the will, they amount to dispositions of residue and, to the extent that they comprise dispositions to the second, third and fourth defendants under cl 1.3 and cl 2.6.4 of the will, they amount to specific bequests.
K1(c)It follows from the answers to questions K1(a) and 1(b) that the gifts in Attachment 3 constitute a combination of legacies, specific bequests and residuary bequests.
Question L: Executor's remuneration
The question posed under this part of the originating summons is:
L1Do the terms 'legal and accounting fees' mean and include administration costs?
The submission of the plaintiff is that by virtue of cl 2.2 in Attachment 2 to the will it is apparent that the deceased intended that legal and accounting fees payable to an executor who obtained a grant of probate and all reasonable legal and accounting fees required in the execution of his wishes contained in the testament should be paid. The first defendant submits that the term 'legal and accounting fees' includes:
(a)legal costs from the grant of probate, advice in relation to the administration and in relation to these proceedings;
(b)accounting fees, the capital gains calculations, advice in relation to the taxation issues of the estate and the preparation of all necessary taxation returns;
(c)administration costs for the administration of the estate to which the executor is entitled under s 98(5) of the Trustees Act 1962 ‑ all usual professional or business charges for business transacted, time expended and acts done by the executor or his firm in connection with the administration of the estate.
The second defendant submits that the term 'legal and accounting fees' means and includes reasonable administration costs and the third defendant agrees with the second defendant's submissions.
The starting point for a consideration of these submissions must be the rule that all proper expenses associated with the administration of the estate should be paid by the executor out of estate assets. In this case, provision is made by Attachment 2 for such expenses to be met by the proceeds from the sale of the share portfolio but, for reasons already given and questions already answered, that is subject to the power of the executor under s 10(1) of the Administration Act to resort to other assets if and when necessary but to make corresponding adjustments in distribution by marshalling to ensure that the costs of administration and other expenses are charged first against entitlements of those beneficiaries who are to share in the distribution of the net proceeds of the share portfolio.
The real practical significance in the provisions relating to the payment of legal and accounting fees is to permit a professional executor to charge proper professional fees for the work which she does in the course of administration in addition to any other entitlement to trustees' remuneration by way of commission which may be payable to her under s 98 of the Trustees Act. Were it not for such a provision or for s 98(5) of the Trustees Act, a professional trustee or her firm would be precluded from charging fees for professional advice or services rendered in the course of administration.
I consider that the answer to be given to this question should be that the costs of administration expenses of this estate may include legal fees incurred by the executor and accounting fees charged by her or her firm in proper amounts for work done and professional services rendered in or in connection with the administration of the estate.
Summary
This lengthy analysis completes the treatment of the issues arising from the questions posed on this originating summons. The answers given to each question are repeated separately in Appendix C in order to facilitate the making of final orders and declarations upon entry of judgment. However, the answers given are to be read in the light of these reasons for decision.
Fourteenth defendant - absence of guardian ad litem
I now repeat the observations contained in [15] and [16] above that, because of the infancy of the fourteenth defendant and the absence of any guardian ad litem appointed to represent his interests, these orders and declarations will not be binding upon him. In this respect, I have earlier indicated that I propose to direct that the plaintiff apply for the appointment of a suitable guardian ad litem for the fourteenth defendant and, upon such a guardian being appointed, this matter be relisted for directions as to whether, and if so how, the proceedings should continue against the fourteenth defendant so represented.
I propose to distribute these reasons on a confidential basis to the solicitors for the parties who were represented at the hearing in advance of the formal delivery of reasons so that, when the originating summons is listed for judgment, counsel will be in a position to move for orders in accordance with the answers proposed by these reasons. There will, of course, then be an opportunity for counsel to be heard as to the particular terms of orders or declarations which should formally be pronounced.
APPENDIX B
This Will or Note of Jeffrey Charles Hogan, now of 17 Colonial Gardens,
MosmanPark, takes place and precedence over my will (hand written 26 March
2003).
1.1It is my express wish that only the immediate members of my family in:
Kerry Janeane Warburton
Anita Lee Hogan
Joshua Kane Hogan
Anai Taylor Smedley Hogan
Robert Kenneth Hogan
Kevin Raymond Hogan
Margaret Denise Hogan
Ken and Margaret Hogan
Leon Warburton
Dannika Warburton
Justin Warburton
Benefit directly from my Estate which includes personal affects and company
Assets. Specific amounts are detailed in Attachments 1 to 4 generally.
1.2 Generally, the property at 17 Colonial Gardens, Mosman Park, Western Australia,
Australia, 6162 owned 50% by myself and 50% by Kerry Janeane Warburton as tenants in common.
1.3My wish is that my share 50% be passed on in cash to my children, Anita Lee Hogan and Joshua Kane Hogan, within 12 months of my death - others are generally gifted as detailed in the Attachments.
Executor Of My Will And Testament
2.1I would appoint Anthony John Deacon of Twin Branch Drive, Leeming as Executor of my Will and Helen O'Brien of RSM Bird Cameron as Co‑Executor on an independent basis.
(Signed)J. Hogan A.A. Gaffney R.E. Boni
2.2Equal legal and accounting fees are to be paid to Anthony Deacon and RSM Bird Cameron for their time in carrying out my wishes.
2.3Kerry Janeane Warburton retains her 50% of 17 Colonial Gardens.
2.4My assets comprise:
50% 17 Colonial Gardens, Mosman Park (my share) $3 M
100%My Share Portfolio $6 M
100%My Life Insurance $2 M
100%My Superannuation Fund $1 M
100%My Positron Group Assets $25 M
Including:
·Property
·Balance Sheet Equity
·Other business assets
·65% of Spliceline
·65% of Tripower
100%Property at 1 Barnes Way, Success $0.6 M
2.5The assets detailed in Clause 2.4 are to be realised / sold at market value and the cash or assets divided up as follows:
Kerry Warburton 35%
Anita Lee Hogan 30%
Joshua Kane Hogan 30%
Anai Taylor Smedley Hogan 5%
2.6The process is such that:
2.6.1Kerry Warburton remains in 17 Colonial Gardens.
2.6.2Margaret and Ken Hogan remain in 1 Barnes Way, Success.
2.6.3The assets are sold / cashed in and all debt including banks, mortgages, creditors, is paid
in full and the remaining cash is distributed.
2.6.4Personal effects are to be divided as follows:
Cellar / Wine Kerry Janeane Warbuton 50%
Anita Lee Hogan 50%
(Signed)J. Hogan A.A. Gaffney R.E. Boni
Antiques / Office Including All Artefacts Joshua Kane Hogan 100%
Knives, Swords, Scales
Helmets, Medals, Collectibles
Safe Deposit Box Contents Kerry Janeane Warburton 35%
Anita Lee Hogan 30%
Joshua Kane Hogan 30%
Anai Taylor Hogan Smedley 5%
VehiclesAll are to be sold at market Anita Lee Hogan 50%
value and proceeds to:
Joshua Kane Hogan 50%
Clothing /At the sole discretion of Anita Anita Lee Hogan 100%
Personal Effects Lee Hogan, otherwise to the
Salvation Army
Cash at Bank Anita Lee Hogan 50%
Anai Taylor Hogan Smedley 50%
Dated this 2nd day of July 2007
Signed:
J.C. HOGAN
_______________________________ ____________________________________
Name Date
in the presence of:
Witness
Signed: A.A.. GAFFNEY Angela Ann Gaffney
Chartered Accountant & Registered Liquidator
C/- 8 St George's Terrace
PERTH WA 6000
02/7/07
________________________________ ____________________________________
Name Date
Address: _____________________________________________________________
Occupation: ____________________________________________________________
(Signed)Robert Elio Boni
C/- 8 St George's Terrace
PERTHWA 6000
CHARTERED ACCOUNTANT
2/7/07
ATTACHMENT 1 - CLAIMS UPON THE ESTATE
This is a note of Attachment to the Last Will and Testament of Jeffrey Charles Hogan (being Attachment 1).
Jeffrey Johnson or any other Positron Group Employee (Except Kerry Janeane Warburton) has no control of or access to or is any way a beneficiary of my Estate.
Rhonda Hogan (my Ex-Wife) has no claim or right to any of my Estate.
The cash flows of my Estate are to be controlled in such a way that the immediate living standards of:
Kerry Janeane Warburton
Anita Lee Hogan
Joshua Kane Hogan
Anai Taylor Smedley Hogan
Ken and Margaret Hogan
Are not changed until after my Estate has been settled.
(Signed)J. Hogan A.A. Gaffney R.E. Boni
02/7/07
ATTACHMENT 2 - IMMEDIATE SHARE SALE
This is a note of Attachment to the last Will and Testament of Jeffrey Charles Hogan (being Attachment 2).
An immediate share sale is to be made of my Portfolio via Paterson Securities, Mr Jon Young will provide cash for:
Funeral and all expense and travelling cost of my immediate family
Pay all personal loans, being property, vehicle, investment.
Pay all reasonable legal and accounting fees required in the Execution of the wishes of my last will and testament to be paid to Anthon Deacon and RSM Bird Cameron.
Provide a weekly cash allowance to:
Kerry Janeane Warburton $4,000
Anita Lee Hogan $2,000
Joshua Kane Hogan $2,000
Anai Taylor Hogan Smedley $1,000
Margaret and Ken Hogan $1,000(Signed)J. Hogan A.A. Gaffney R.E.Boni
02/7/07
ATTACHMENT 3
This is a note of Attachment to the Last Will and Testament of Jeffrey Charles Hogan (being Attachment 3).
I estimate that at the time of writing this document, being my last will and testament, my worth is $38 million, less $3.5 million in personal loans of which Kerry Janeane Warburton is responsible for $1.5 million and approximately $36 million (+/-) being the businesses final position, totalling $76 million.
It is my wish that these monies (approximate only) be divided as follows:
Kerry Janeane Warburton $10.4 M
Plus her 50% share of 17 Colonial Gardens, Mosman Park
Anita Lee Hogan $10.4 M
Joshua Kane Hogan $10.4 M
Anai Taylor Hogan Smedley $1.8 M
Total $33 M
The remaining $3.0 Million:
Dianne Hogan / Martin & Family $500,000
Robert Kenneth Hogan $300,000
Kevin Raymond Hogan $300,000
Ken and Margaret Hogan $300,000
Leon Warburton $300,000
Dannika Warburton $300,000
Justin Warburton $1 M
(Signed)J. Hogan A.A. Gaffney R.E. Boni
ATTACHMENT 4 - ART COLLECTION
This is a note of Attachment to the Last Will and Testament of Jeffrey Charles Hogan (being
Attachment 4).
My Art Collection which comprises:
Storrier Burning Log - Large $140,000
Storrier Burning Log - Smaller $120,000
Pro Hart Miners Camp In Front of Pond $20,000
Olsen, John Paella $40,000
Total Value (Approximate) $320,000
Is to be distributed as follows:
Storrier Burning Log - Large Anita Lee Hogan
Storrier Burning Log - Smaller Joshua Kane Hogan
Pro Hart Miners Camp In Front of Pond Anai Taylor Hogan Smedley
Olsen, John Paella Kerry Janeane Warburton
(Signed)J. Hogan A.A. Gaffney R.E. Boni
02/7/2007
APPENDIX C
Proposed orders and declarations in answer to questions posed by originating summons
This court does now order, declare and adjudge that the questions in the originating summons should be answered as follows:
Question A: Direction for Sale
A1Does the Will preclude the Plaintiff (the Executor) from postponing sale under section 27(1)(c) of the Trustees Act:
A2Does the Will preclude the Plaintiff from making any in specie appropriations of shares or other estate assets?
A3If the Plaintiff may make in specie appropriations, at what date is the value of the property to be determined for that purpose?
Answer:
A1No.
A2No.
A3The date or dates of each appropriation or distribution
Question B: Estate's Half Share Interest in the Property at 17 Colonial Gardens, Mosman Park ('The Mosman Park Property')
B1Does the Will give the First Defendant (the Deceased's de facto wife) a right of occupation of the Mosman Park property?
B2If so what is the nature and extent of that right?
B3If so what are the respective obligations of the estate and the First Defendant in relation to outgoings on the Mosman Park property?
B4In what proportions do the proceeds of sale of the Mosman Park property pass to the First Defendant, the Second Defendant (the Deceased's daughter), the Third Defendant (the Deceased's son) and Fourth Defendant (the Deceased's granddaughter) under the Will?
Answer:
B1Yes.
B2A right to continue to reside in the Mosman Park property unless and until the first defendant ceases to live there as her permanent home or until the administration of the estate of the deceased has been completed to the point at which a sale or realisation in the estate interest in Mosman Park should occur, whichever first happens.
B3During the continuation by the first defendant of the right of occupancy of Mosman Park she should pay all outgoings of a recurrent nature associated with the occupation of the property including, but not necessarily limited to, rates, taxes, water rates and charges for services, including electricity, gas, water and telephone and meet any recurrent expenditure for regular maintenance or repairs of a non‑capital nature. During this period the estate should be responsible for insurance and any capital expenditure, repairs or alterations of a capital nature and insurance against fire and other usual risks. Upon the termination of the first defendant's right of occupancy and until sale of Mosman Park, the estate and the first defendant will be equally responsible for all expenditure and outgoings on the property both of a capital and recurrent nature.
B4Upon the sale or realisation of the deceased's interests in the Mosman Park property (whether occurring simultaneously with the sale of the first defendant's interest in that property or not) the net proceeds of sale deriving from the estate share in the property will be distributable between the second and third defendants equally.
Question C: 1 Barnes Way, Success ('the Success Property')
C1Is the Fifth Defendant (the Deceased's mother) given a right of occupation of the Success Property?
C2If so what is the nature and extent of that right?
C3If so what are the respective obligations of the estate and the Fifth Defendant in relation to outgoings on the Success Property?
C4In what proportions does the proceeds of sale of the Success Property pass to the first, Second, Third and Fourth Defendants under the Will?
Answer:
C1Yes.
C2The nature and extent of the right of a personal occupation is for the fifth defendant to reside in the Success property for as long as she wishes as her permanent home. Upon vacation of the property or upon it being ceased to be used by the fifth defendant as her personal home, the right of occupation terminates.
C3The estate of the deceased should meet all outgoings of a capital nature associated with the Success property during the period of occupation by the fifth defendant but the fifth defendant should meet occupational expenses such as the cost of rates, water rates, land tax, if any, and outgoings associated with occupation such as charges for services including electricity, gas, water and telephone. Insurance against fire and associated risks should be an estate expense. Similarly, expenditure for capital works, improvements or repairs should be met by the estate but expenditure for minor repairs and maintenance not of a capital nature should be met by the fifth defendant. From the date when the fifth defendant vacates the Success property, all expenses and outgoings thereafter accruing should be met by the estate.
C4The proceeds from the sale of the Success property should be distributed in the shares specified in cl 2.5 of the will between the following beneficiaries in the following shares:
First Defendant 35%
Second Defendant 30%
Third Defendant 30%
Fourth Defendant 5%
Question D: Paterson Securities Portfolio
D1Is the Paterson Securities Portfolio charged with payment of all expenses and debts including funeral and testamentary expenses, debts, loans and all administration costs?
D2Is the Plaintiff obligated to liquidate the whole of the Paterson Securities Portfolio?
D3If the Paterson Securities Portfolio is insufficient for meeting the debts with which it is charged, from what part of the estate are expenses and debts to be met?
Answer:
References in this question to the 'Paterson Securities Portfolio' proceed on an unfounded basis. The references in the will of the deceased to 'my share portfolio' (cl 2.4) and 'my Portfolio' (in Attachment 2) upon the proper construction of these terms in the will as a whole are references to all shares held by the deceased at the date of death and not merely to those shareholdings which were then CHESS sponsored through Patersons Securities Ltd. The following answers to these questions proceed on the basis of this wider meaning of the term 'share portfolio'.
D1The provisions in the will directing that the designated debts and expenses should be paid from the proceeds of the deceased's share portfolio do not constitute any charge by way of security over the share portfolio or any other asset of the estate but, rather, constitute a direction as to which assets of the estate should ultimately bear the cost of those debts and expenses and, consequently, which bequests in the will should ultimately bear the cost of those expenses.
The will contains a direction that the executor should resort first to the proceeds of sale of the share portfolio for the payment of all expenses, including funeral and testamentary expenses, debts, loans and all administration costs and the weekly advances provided by Attachment 2. This direction does not inhibit or restrict the executor from resorting to the realisation of any other estate assets for the payment of debts, liabilities, administration expenses or other outgoings payable in the course of administration available to the executor by s 10 of the Administration Act.In the event that the aggregate of those expenses does not exceed the net proceeds eventually realised from the sale of the deceased's share portfolio, when it comes to the ultimate distribution of the assets, the distribution should be marshalled to ensure that those debts, and expenses are met from funds which would otherwise be payable to the beneficiaries entitled in distribution to the sale proceeds of the share portfolio and that other specific devises, legacies and bequests in the will are not reduced by reason of that expenditure. In the event that the proceeds of the sale of the deceased's share portfolio are not sufficient to meet all the said expenses then, after resorting to such other asset or assets at her discretion as is necessary to satisfy those expenses, the executor should marshal distributions in such a way as to ensure that these expenses are debited against distributions payable to the beneficiaries of the residuary estate of the deceased.
D2Not for the purpose of meeting the designated expenditure although, subject to the power to distribute in specie or to appropriate particular assets in satisfaction of entitlements of particular beneficiaries, the eventual sale and realisation of the whole of the deceased's share portfolio will be required to complete the course of administration.
D3Expenses and debts of the estate in the course of administration may be met by the executor from any part of the estate assets at the executor's discretion. If such debts and expenses are met from assets of the estate other than the proceeds of sale of the deceased's share portfolio or, in the event that these proceeds are insufficient to meet all debts and expenses and the executor has to resort to other assets to meet them, then on eventual distribution all such costs and expenses shall be applied first in reduction of the benefits payable under the will to the beneficiaries entitled in distribution to the proceeds of sale of the share portfolio and, in the event that the proceeds of that share portfolio are insufficient to meet all debts and expenses, the extra debts and expenses should be debited pro rata against the benefits payable to the residuary beneficiaries, that is, the beneficiaries named in cl 2.5.
Question E: Cash Allowances
E1Are the weekly cash allowances to be paid by the Plaintiff in terms of Attachment 2?
E2If so, what are the terms on which the cash allowances are to be paid and are the cash allowances to be brought into account in the distribution of the estate?
Answer:
E1The weekly cash allowances referred to in Attachment 2 should be paid by the executor to each of the beneficiaries named in Attachment 2 in the amounts there provided.
E2The weekly cash allowances are to be paid to each person entitled without deduction and are not to be brought to account in reduction of any other benefits payable to any of those beneficiaries under other provisions of the will.
Question F: Art Collection
FAre the values of the paintings specified in Attachment 4 of the Will to be brought into account in the distribution, or are the gifts of the paintings specific bequests and the values immaterial to the distribution?
Answer:
FThe dispositions of the artworks referred to in Attachment 4 of the will are specific bequests to those named beneficiaries which are not to be brought to account by any of those beneficiaries in reduction of other distributions due to any of them under other provisions of the will. Furthermore, so far as there are certain other artworks owned by the deceased and forming part of the estate not specifically mentioned in Attachment 4, the implicit intention of the testator is that the beneficiaries named in Attachment 4 should receive all artworks belonging to the deceased at time of his death.
Question G: Gift of Cash at Bank
GIs the gift of cash at bank in clause 2.6.4 a specific legacy in addition to any other benefits the Second Defendant and the Fourth Defendant receive under the Will?
Answer:
GYes.
Question H: Travel Expenses
H1Does "all expenses and travelling costs" refer to the costs of travel to the Deceased'sfuneral?
H2Does "all expenses and travelling costs" include:
(a)airfares
(b)hotel accommodation
(c)meal costs
(d)taxi or hire car fees
H3Who falls within the description of "immediate family"?
Answer:
H1Yes.
H2Yes. All of these.
H3All fourteen defendants.
Question I: Identity of Beneficiaries
I1Is "Dianne Hogan/Martin" referred to in Attachment 3, the Seventh Defendant (the Deceased's sister)?
I2Is "Margaret Denise Hogan" referred to in clause 1.1, the Seventh Defendant?
Answer:
I1Yes.
I2Yes.
Question J: Gifts to Dianne Hogan/Martin & Family
JTo whom is the gift in Attachment 3 described as "Diane Hogan/Martin & Family" to pass and in what proportions?
Answer:
JThe gift of $500,000 in Attachment 3 described as being to "Dianne Hogan/Martin & Family" is a gift of that amount to the seventh, twelfth, thirteenth and fourteenth defendants as tenants in common in equal shares.
Question K: Legacies or an interest in residue
K1Are the gifts in Attachment 3:
(a)legacies; or
(b)the disposition of residue; or
(c)a combination of both.
Answer:
K1(a)The gifts in Attachment 3 of specific amounts totalling $3 million in the proportions there set out to each of the fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth defendants are specific legacies.
K1(b)The provisions in Attachment 3 of approximate amounts distributable to the first, second, third and fourth defendants are estimates by the testator of the aggregate amounts distributable to those defendants under the combined effects of cl 1.3, cl 2.5 and cl 2.6.4 of the will disregarding the total of any weekly cash allowances paid to them under Attachment 2. To the extent that these estimates reflect entitlements under cl 2.5 of the will, they amount to dispositions of residue and to the extent that they comprise dispositions to the second, third and fourth defendants under cl 1.3 and cl 2.6.4 of the will, they amount to specific bequests.
K1(c)The gifts in Attachment 3 constitute a combination of legacies, specific bequests and residuary bequests.
Question L: Executor's Remuneration
LDo the terms "legal and accounting fees" mean and include administration costs?
Answer:
LThe costs of administration expenses of this estate include legal fees properly incurred by the executor and accounting fees properly charged by her or her firm for work done and professional services rendered in or in connection with the administration of the estate but are not limited only to those expenses.
Further order
Within a time to be fixed by the court, the plaintiff do apply for the appointment of a suitable guardian ad litem for the infant fourteenth defendant and, upon such a guardian being appointed, the originating summons shall be relisted for directions as to whether and, if so, how the proceedings should continue against the fourteenth defendant so represented.
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