Osborne v Osborne
[2000] VSC 95
•23 March 2000
| SUPREME COURT OF VICTORIA | |
| COMMON LAW DIVISION | Not Restricted |
No. 4000 of 1996
| RAY OSBORNE | Plaintiff |
| v. | |
| FREDERICK OSBORNE AND OTHERS | Defendants |
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JUDGE: | HARPER, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 17, 18 and 21 FEBRUARY 2000 | |
DATE OF JUDGMENT: | 23 MARCH 2000 | |
CASE MAY BE CITED AS: | OSBORNE v. OSBORNE | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 95 | |
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CATCHWORDS: Wills – Whether mutual – Whether surviving testator bound not to revoke – Claim by disappointed beneficiary for equitable interest in estate of surviving testator - Birmingham v. Renfrew (1937) 57 CLR 666; In re Oldham [1925] Ch. 75; Gray v. Perpetual Trustee Co. Ltd. [1928] AC 391 applied – In re Dale [1994] Ch. 31 doubted.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. P. Edmunds | Lou Castellono |
| For the Defendants | Mr. G. Loewenstein | Rigby Cooke |
HIS HONOUR:
Frederick Osborne was born on 2 April 1912. On 24 December 1938, he married Winifred Alice McCulloch. She, having been born on 7 September 1905, was six years and seven months older than her husband. They subsequently had two children: Neil Frederick Osborne, born on 30 January 1942, and Ray Osborne born on 7 May 1944. For some time, the address of the matrimonial home was 3 Riverview Terrace, Bulleen. On 13 July 1976, however, husband and wife became the joint proprietors of property known as Unit 1, 36 Belmont Avenue, Glen Iris. That unit remained the matrimonial home until Winifred's death on 26 July 1985, an event which had the effect at law (but not, the plaintiff submits, in equity) of transforming her widower's joint interest in the unit into sole legal ownership. He, in turn, continued to reside there until he died on 22 May 1996. He had previously remarried (on 28 July 1990, to Daisy Patterson) and thereafter the unit once again became the matrimonial home. Mrs. Daisy Osborne lives there still.
This, according to the plaintiff, her stepson Ray Osborne, is the consequence of a breach by his father of an agreement between his father and mother made on or before 24 March 1985. On that day, both the plaintiff's parents executed wills before the same witnesses. Each will consists of an individual paragraph, four subsequent numbered paragraphs, and an attestation clause. The numbered paragraphs are, as between each will, identical. The introductory paragraphs and the attestation clauses differ only in the name of the testator or testatrix.
The plaintiff alleges that the making of these wills was preceded by discussions in which he was involved. According to the second further amended statement of claim, those discussions took place during March 1985 at the plaintiff's then home and at his parents' unit. During them, his parents (according to particulars given under paragraph 4 of the second further amended statement of claim):
"… said that they would revoke their previous wills which had been made on 10 May 1974 and execute new wills so that they would both leave all their real and personal property to their sons, rather than to each other (which was the case in the previous wills they had made). They said that they wanted their children to be treated equally. If a son predeceased either of them his interest would go to his children. They said that they wanted to make the same provision for each of their children."
According to the plaintiff, the wills made by each of his parents on 24 March 1985 reflected the agreement which resulted from those discussions; and it is at all events clear enough that some consensual arrangement was involved. Coincidence cannot explain how two people would have made relevantly identical wills before the same witnesses on the same day.
The plaintiff alleges not merely a loose consensual arrangement, or that which Lord Loughborough, L.C. in Lord Walpole v. Lord Orford[1] described as "an honourable engagement", but an agreement which created rights and obligations enforceable at law, or in equity, or both. Paragraph 4 of the second further amended statement of claim sets the scene:
"4.On and prior to 24 March 1985 it was agreed between Winifred Alice Osborne and [Frederick Osborne] that:
(a)each would revoke their former wills and testamentary dispositions;
(b)each would make mutual wills which wills would not be revoked during the life of the survivor;
(c)by the mutual wills each would leave the whole of their estate to their respective children absolutely and, in the event of such child not surviving the parent who died, then that child's children would take under the will in his place."
[1](1791) 3 Ves. Jun. 402 at 419
Sub-paragraphs (a) and (c) of paragraph 4 were given effect by the events of 24 March. Sub-paragraph (b) is what this case is all about. Frederick Osborne, having survived Winifred Osborne, did revoke the will which he made on that day. Winifred did not revoke hers. Probate of it was granted to the plaintiff on 7 November 1985.
If paragraph 4(b) accurately describes a term of an agreement reached between Winifred Osborne and her husband on 24 March 1985, then Frederick Osborne departed from that term when, in contemplation of his second marriage, he made a new will on 18 June 1990. He then, after revoking "all former testamentary dispositions" gave his motor car, and a life interest in the unit, to Daisy Patterson. His estate otherwise went to those of his sons who survived him, and to the children of the son or sons who did not.
A more radical departure from the position which, as the plaintiff would have it, obtained on 24 March 1985, was effected on 13 February 1995. On that day, Frederick Osborne made a further will. He also, with his wife Daisy, executed a deed of family arrangement. By the latter document, Mr. Osborne agreed that, in consideration of its execution by his wife, he would transfer to her his interest in the unit. That transfer duly took place. For her part, Mrs. Osborne covenanted that she would, by her will, dispose of the interest thus created (together with the contents of the unit) in accordance with the terms of the schedule to the deed. She also agreed that, having made such a will, she would not revoke it. That will, so the schedule specified, was to give Frederick Osborne a right to reside in the unit, and a right to enjoy its contents during his life or until he decided that he no longer wished to exercise those rights; and upon the "release" of the unit and its contents all were to be sold, with one half of the proceeds going to Neil Osborne. The balance of the proceeds of sale were to go (on terms as specified in the schedule) to each of three named grandsons of Frederick Osborne.
On 13 February 1995, Mrs. Daisy Osborne made a will which conformed to the requirements of the deed of family arrangement. By the will which he also made on that day, Frederick Osborne, for his part, left the whole of his estate to his executors and trustees on trust to convert that estate into money and, after paying all debts, funeral and testamentary expenses and the like, to pay one half of the proceeds to Neil Osborne, and the other half in equal shares to three named grandsons. The effect of these provisions was that the plaintiff's son Brett was a beneficiary under both wills, as were each of Neil Osborne's sons, Colin and Mark. Neither the plaintiff nor his other son, David, were a beneficiary under either will.
It was this state of affairs which the plaintiff sought to challenge when, on 2 January 1996, these proceedings began with the issue of a writ naming his father, his stepmother and his brother as defendants. The subsequent death of his father necessarily entailed some amendments to the statement of claim, which in its present form, misnamed the "second further amended statement of claim", is a complete substitution for earlier versions.
Apart from paragraph 4(b), the gravamen of the present claim is set out in paragraphs 11-18 of the "amended" pleading. By paragraph 11, it is alleged that Frederick Osborne held the unit and its contents as trustee for his two sons absolutely as tenants in common. Paragraphs 12 and 15 allege a breach of the agreement alleged in paragraph 4, and a breach of the trust alleged in paragraph 11. The breach is said to be constituted not only by the making of the deed of family arrangement, and by the transfer to Daisy Osborne of the unit and its contents (paragraph 12) but also by the revocation of the will of 24 March 1985, and by the making of a fresh will from the benefit of which the plaintiff was excluded (paragraph 15).
In the particulars under paragraph 12 it is alleged that the consideration for the transfer of the unit and its contents was "love and affection". Mrs. Daisy Osborne therefore became the registered proprietor of the unit otherwise than for value: paragraph 16. Accordingly, so the plaintiff claims, she holds the unit and its contents in trust for the plaintiff and Neil Osborne "as tenants in common absolutely": paragraph 18. A declaration is sought to that effect.
An agreement such as that alleged in paragraph 4 of the second further amended statement of claim, containing the term alleged in paragraph 4(b), "can be established only by clear and satisfactory evidence": Birmingham v. Renfrew[2], per Dixon, J. His Honour added (at 681-682):
"It is obvious that there is a great need for caution in accepting proofs advanced in support of an agreement affecting and possibly defeating testamentary dispositions of valuable property."
[2](1937) 57 CLR 666 at 681
The same point was made by Latham, C.J. in the same case (at 674-675):
"Those who undertake to establish such an agreement assume a heavy burden of proof. It is easy to allege such an agreement after the parties to it have both died, and any court should be very careful in accepting the evidence of interested parties upon such a question. Perhaps most husbands and wives make wills 'by agreement', but they do not bind themselves not to revoke their wills. They do not intend to undertake or impose any kind of binding obligation. The mere fact that two persons make what may be called corresponding wills in the sense that the existence of each will is naturally explained by the existence of the other will is not sufficient to establish a binding agreement not to revoke wills so made."
His Honour cited, in support, the case of In re Oldham[3]. In that case, husband and wife made wills in the same form and on the same day: 4 January 1907. Each gave his or her property to the other absolutely with the same alternative provisions in case of lapse. The husband died on 9 September 1914, without having revoked his will. On 1 December 1921, his widow remarried and made a new will. This departed entirely from that of 1907. The plaintiff, who was a relative of the widow's first husband and a beneficiary under the earlier will, claimed a declaration that, because the widow took the benefit under her first husband's will, a valid trust was created under that of the survivor. It was submitted that her executors must therefore hold her property upon that trust.
[3][1925] Ch. 75
The claim failed. Astbury, J. said, at 87-88:
"In order to enforce the trust for which the plaintiff contends I must be satisfied that its terms are certain and unequivocal and such as in the circumstances I am bound to give effect to. What is the evidence of that? Of course it is a strong thing that these two parties came together, agreed to make their wills in identical terms and in fact so made them. But that does not go nearly far enough. If the spouses intended to do what the plaintiff suggests, it is difficult to see why the mutual wills gave the survivor an absolute interest in the whole of the property of the one who died first.
The plaintiff says that each was satisfied to trust the other and make the arrangement only in respect of the property taken by the survivor and not disposed of in the survivor's lifetime. Now this question must be answered. Could these parties have acted as they did with any other object or intent than the plaintiff asserts? It is impossible to deny that they could. I cannot build up a trust on conjecture, and there are many reasons which may have operated on the minds of these mutual will makers. Each may have thought it quite safe to trust the other … But that is a very different thing from saying that they bound themselves by a trust that should be operative in all circumstances and in all cases. … It is difficult to imagine that when the mutual wills were made, it was intended that under no circumstances should the survivor have any power of altering the trusts except by disposition inter vivos.
The circumstances under which Birmingham v. Renfrew was decided were in some respects comparable and in other respects decidedly not. On 31 March 1932 Joseph Russell made a will in which, after providing for payment of his debts and funeral and testamentary expenses, he left the residue of his estate to his wife (Grace Russell) and, if she should predecease him, to four members of her family. The following day,1 April 1932, Grace Russell made a will of her own. She granted certain family legacies, left the residue of her estate to her husband, and provided that, should he not survive her, the estate was to go to the same four members of her family as were named in her husband's will.
Neither Mr. nor Mrs. Russell were independently wealthy. Shortly before the making of the wills, however, Mrs. Russell became the beneficiary of a very valuable gift left to her by an uncle in his will. The narrative is continued by Dixon, J. at 682:
"The testatrix had succeeded to a large amount of property in consequence of some predilection in her favour on the part of an uncle who might have spread his gifts more widely among the members of the family. Some difficulties had arisen in the administration of his estate which worried her and made it appear inexpedient to make her husband tenant for life under her will and bequeath her estate in remainder to the four [named relatives]. The time had come when she considered that she ought to make a will. And it was natural that she should wish to be sure that the relatives of her late uncle and of herself would succeed to the estate which he had left to her. Witnesses deposed to a circumstantial account of discussions between the wife and one or other of the intended beneficiaries. They narrated how the wife definitely stated in his presence the terms of the arrangement made with the husband and how he assented to her statement. The evidence, if believed, could leave no doubt that the wife made her will upon the faith of assurances on the part of her husband that he would leave his will unrevoked should she die first and that he made his will as part of the arrangement under which she made hers."
These facts were such as to move Dixon, J. to say (at 682) that the claim by Mrs. Russell's four disappointed relatives was invested "with some probability". The conclusion of the trial judge, Gavan Duffy, J., was that a legally enforceable agreement had been made. In the opinion of Dixon, J., expressed at 682-683, this was fully justified:
"I think the legal result was a contract between husband and wife. The contract bound him, I think, during her lifetime not to revoke his will without notice to her. If she died without altering her will, then he was bound after her death not to revoke his will at all. She on her part afforded the consideration for his promise by making her will. His obligation not to revoke his will during her life without notice to her is to be implied. For I think the express promise should be understood as meaning that if she died leaving her will unrevoked then he would not revoke his."
It is clear from these cases that, if the plaintiff is to succeed, he must overcome the heavy burden of proof required to establish a particular contract between his parents. A loose arrangement will not do. An agreement to make identical wills will not, of itself, do either. The plaintiff must prove a contract, to which each of his parents was a party, that each would make a will which, during their joint lives, would not be revoked without notice to the other; and after the death of the first to die would not be revoked by the survivor. It is true that the plaintiff sues not on a contract but upon a trust. But "without such a definite agreement there can no more be a trust in equity than a right to damages at law": Gray v. Perpetual Trustee Co. Ltd.[4]
[4][1928] AC 391 (Privy Council) at 400
In considering whether the plaintiff has overcome the burden of proof which rests upon him, it is as well to remember that many couples join in making wills which reflect their joint view of the proper disposition of their property; but in doing so they do not bind themselves not to revoke their wills nor indeed intend to undertake or impose any other kind of binding obligation.
In my opinion, the plaintiff has failed to prove the contract upon which his case depends. There is simply no evidence that either parent intended to prevent the other from ever, in any circumstances, revoking his or her will if the first to die left, at the time of his or her death, his or her will in the form it took on 24 March 1985. The plaintiff was cross-examined on this very point. In my opinion, his evidence came nowhere near establishing the contract which is pleaded by paragraph 4(b) of his second further amended statement of claim.
Each parent agreed, in March 1985, that each would leave his or her property to the two brothers in equal shares. They had a motive, apart from their natural desire that their property pass to their sons, for adopting this position. They feared the reintroduction of death duties. They reasoned that, if these duties were reintroduced, their effect would be minimised if each parent left his or her property to Ray and Neil.
That was the position which each parent adopted in March 1985. The evidence does not suggest that they then resolved never to alter the dispositions they then made, no matter how much their circumstances might change.
The plaintiff puts forward, in opposition to this conclusion, a question asked by his father in May 1990. It was whether the plaintiff would grant Daisy "a life occupancy of the unit" after Frederick Osborne died: witness statement of the plaintiff, paragraph 14. I am asked to infer from this a consciousness in the plaintiff's father that the plaintiff had, or would on Frederick Osborne's death necessarily acquire, an interest in the unit sufficient to exclude Daisy.
In my opinion, however, an inference no less open is that the plaintiff's father wished to know whether his desire to make an appropriate provision for his second wife necessitated the making of a new will, which he was perfectly free to do, or whether he could trust his son to do what Frederick saw as the right thing by Daisy. Since the latter inference is no less open than the former, the question does not assist the plaintiff in the discharge of his burden of proof.
The plaintiff next relies on a letter which he wrote to his father on 17 May 1990. He set out, in that letter, his opposition to the suggestion that Daisy be granted a life interest in the unit. He based his opposition, however, not on the proposition that his parents had agreed not to revoke their wills of March 1985, but rather on the proposition that "I did not believe my mother would have gone along with the proposal": plaintiff's witness statement, paragraph 16. Again, this evidence does not assist the plaintiff's case; and nor does his evidence about his father's reply. According to the plaintiff, his father simply responded with the comment "let's leave it at that": witness statement, paragraph 17. This hardly amounts to an acknowledgment by Frederick Osborne that he was bound by an agreement with the plaintiff's mother to leave the unit to Ray and Neil.
By letter dated 23 November 1991 and signed by both the plaintiff's father and Daisy Osborne, the former sought to narrow a split which had obviously opened between (on the one hand) himself and his wife and (on the other) the plaintiff and the plaintiff's de facto wife, Julie Cassidy. The letter concludes:
"Nothing has changed. At some future date Neil and you will get your inheritance, any other matters are irrelevant. Neil, his boys, your and my relatives, the Patterson family and our friends think it great that Daisy and I have a second chance at happiness. Next year I will be 80 and I do not want to have to cope with hassles of any kind. I want to be your father and close to you, so how about we give it a try? You and Julie are always welcome to stay with us whenever you are in Melbourne. If your entitlement of tickets permits you to give me two, Daisy and I would be pleased to be at your graduation. We offer our sincere congratulations and wish you every success in the future."
This letter is clearly intended to signal Frederick Osborne's then intention to give his sons "their inheritance" in due course. It is in my opinion nevertheless impossible to conclude that, on the balance of probabilities, the proper inference open is that the letter constitutes an admission by the plaintiff's father that the former was bound by an agreement with the plaintiff's mother to leave all his property to his sons on his death. It is at least as likely that Frederick, seeking a reconciliation with Ray, wished to reassure his son that, as things then stood, Ray was not about to be disinherited. At the same time, it is perfectly possible that, if asked, Frederick would have asserted that, were relations not improved, he might have second thoughts – as (he doubtless would have continued) he was perfectly entitled to do.
The plaintiff also relies upon a letter dated 16 October 1994 written by him to his father. That letter contains the following passage:
"You will remember years ago, one day you and mum made identical, mutual wills with Peter McGrath – the effect of which was that in the case of one of you passing, that estate went to Neil and I directly, rather than to the other. You will recall the reason you and mum did this was to ensure that your estate/s went to Neil and I directly – not firstly to the government by way of death duties in the unfortunate circumstance they ever be reintroduced."
Frederick Osborne did not reply to this letter. In paragraph 22 of his witness statement, the plaintiff seeks to make the point which he says arises from this circumstance:
"My father never wrote to me nor spoke to me during his lifetime challenging or disputing that he and my mother executed mutual wills."
Accepting the evidence about Frederick Osborne's silence, it nevertheless seems to me to be impossible to infer from it an admission by the plaintiff's father that by an agreement with the plaintiff's mother "each would make mutual wills which wills would not be revoked during the life of the survivor": second further amended statement of claim, paragraph 4(b).
The final matters relied on by the plaintiff point anywhere but in the direction he would have me take. They are that on 13 February 1995, his father transferred the unit to Daisy, made a fresh will, and executed the deed of family arrangement – all without consulting the plaintiff, who was not a beneficiary under either the will or the deed.
These facts do nothing for the plaintiff's case. They only prove that, by February 1995, Frederick had no wish to leave anything to his younger son. They do not prove that the plaintiff's father once entered into an agreement which, in the events which followed, bound him to leave his property to Neil and Ray.
Even were he to prove the contract upon which his case depends, the plaintiff would in my opinion ultimately fail. Proof of the contract is a necessary, but not sufficient, condition. Not being a party to the contract, the plaintiff cannot sue upon it. If he is to succeed, he must establish his claim in equity.
As the Privy Council pointed out in Gray v. Perpetual Trustee Co. Ltd.[5], and as I have already noted, "without … a definite agreement there can no more be a trust in equity than a right to damages at law". Equity, however, acts in the case of mutual wills where there has been a disposition of property made upon the faith of the survivor's carrying out the obligations of his or her contract. This is an element which brings such a case under the equitable jurisdiction for the prevention of fraud.
[5] [1928] AC 391 at 400
There was no shortage of fraud in Birmingham v. Renfrew. The wife had recently succeeded to the estate of an uncle, who had expectations that other relatives would eventually share. The husband promised that, if the wife left the estate to him, he would, in turn, by his will benefit the relatives in question. She performed her part of the bargain. He did not. Having inherited her estate, he made a new will under which his wife's relatives did not receive the gifts which the wife and her husband agreed they should have.
The contrast between those circumstances and the facts upon which the plaintiff relies is stark. On the evidence available to me, the proper conclusion is in my opinion that the plaintiff's mother was not induced by her husband to leave her property to her sons; this was a decision to which she would have come no matter what he decided to do. In other words, Winifred Osborne had her own reasons for wishing to leave her property to Ray and Neil. Nothing suggests that, had Frederick decided upon a different disposition in his will, she would have changed her mind. Nothing suggests that she was induced by Frederick to do that which she otherwise would not have done – still less, that Frederick had anything to gain by offering such an inducement. And it is absolutely clear that she did not leave property to Frederick on the basis that he would, in turn, dispose of it to the benefit of their children. Winifred, after all, left her property not to Frederick (who gained nothing from her will) but to her sons. I can find no evidence in any of this of any fraud perpetrated on Winifred by her husband.
It follows that, even if the plaintiff could show a breach of a relevant contract, he cannot prove fraud: for it is of course clear that a breach of contract without more does not amount to fraud.
In In re Dale[6], Morritt, J. held, uncontroversially, that the application of the doctrine of mutual or corresponding wills requires the parties to have entered into a legally binding contract to make and not to revoke mutual wills. His Lordship also held, equally uncontroversially, that the doctrine requires that the first testator to die has performed (as in the case of Winifred Osborne) her part of the agreement; and that the aim of the principle underlying the doctrine is to prevent fraud on him or her. More controversially, his Lordship went on to hold that the doctrine is not confined to cases in which the surviving testator has benefited under the will of the other testator, but in appropriate circumstances may extend also to cases where the two testators have left all their property to beneficiaries other than themselves. It is possible, his Lordship held, that even in such cases, a fraud might (in certain circumstances) be perpetrated on the first testator were the survivor permitted to depart from the bargain, and make a new and materially different will.
[6] [1994] Ch. 31
Morritt, J. only decided what was, in that case, the preliminary issue: that is, whether for the doctrine of mutual wills to apply it is necessary for the surviving testator to have obtained a personal financial benefit under the will of the first testator to die. Accordingly, his Lordship did not decide whether, in that case, fraud had in fact been proved. But, as far as I am aware, in every other case of mutual or corresponding wills in which fraud has been found, the will of the first testator to die did make provision in favour of the surviving testator, who took under it. Such a benefit is envisaged by the authors of the second (1989) edition of Wills and Intestacy in Australia and New Zealand as being an element in a claim under this head for relief in equity; but that edition was of course published before the judgment in In re Dale.
For my part, I think, with respect, that his Lordship's analysis of the authorities is, in that case, unconvincing, although the result (as a decision on a preliminary point) is perhaps justifiable. In the circumstances, however, I need not take the matter further.
In my opinion, the plaintiff has failed to establish either the contract pleaded by the second further amended statement of claim, or fraud. It follows that his claim must be dismissed.
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