Perpetual Trustees WA Ltd v Darvell
[2001] WASC 123
PERPETUAL TRUSTEES WA LTD as Executor of the Estate of HENRY JAMES DARVELL -v- DARVELL & ORS [2001] WASC 123
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 123 | |
| Case No: | CIV:1448/2000 | 14 MARCH 2001 | |
| Coram: | WHEELER J | 18/05/01 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Questions answered: 1 Yes 2 Unnecessary to answer 3 No 4 Unnecessary to answer 5 Unnecessary to answer 6 Unnecessary to answer | ||
| PDF Version |
| Parties: | PERPETUAL TRUSTEES WA LTD as Executor of the Estate of HENRY JAMES DARVELL MARION FAITH DARVELL EDITH MARY DARVELL as Executor of the Estate of ANTHONY JOHN DARVELL DOREEN DAPHNE DARVELL PATRICIA JUNE SLIGHT |
Catchwords: | Equity Trusts Application by trustee for directions Life tenant and remainderman Maintenance and payment of outgoings Turns on own facts Succession Wills, probate and administration Construction and effect of testamentary dispositions No new point of principle |
Legislation: | Trustees Act 1962 (WA) |
Case References: | Carrodus v Carrodus [1913] VLR 1 Ford v Keenan (1914) 30 NSW WN 214 Gibbons v Gibbons [1920] 1 Ch D 372 Lehman v Haskard, unreported; SCt of NSW; Equity Div; 29 August 1996 Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785 Edwards v Edwards (1918) 24 CLR 312 MacLaren v Stainton (1858) 27 LJCh 442 O'Hern v O'Hern, unreported; SCt of WA; Library No 7358;10 November 1988 Perpetual Trustees WA Ltd (as Executor of the will of Goyder (dec)) v Goyder & Ors, unreported; SCt of WA; Library No 990138; 24 March 1999 Re Herklot's Will Trusts [1964] 2 All ER 66 Re Sinnamon (dec) [1940] QWN 41 Re Trusts of the Will of Gilchrist (1867) 6 SCR (NSW) Eq 74 The Trustees Executors & Agency Co Ltd v Jope (1902) 27 VLR 706 Thomas v Haworth (1918) 20 WALR 78 Wilkie v The Equity Trustees Executors & Agency Co Ltd [1909] VLR 277 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARION FAITH DARVELL
First Defendant
EDITH MARY DARVELL as Executor of the Estate of ANTHONY JOHN DARVELL
Second Defendant
DOREEN DAPHNE DARVELL
Third Defendant
PATRICIA JUNE SLIGHT
Fourth Defendant
Catchwords:
Equity - Trusts - Application by trustee for directions - Life tenant and remainderman - Maintenance and payment of outgoings - Turns on own facts
(Page 2)
Succession - Wills, probate and administration - Construction and effect of testamentary dispositions
No new point of principle
Legislation:
Trustees Act 1962 (WA)
Result:
Questions answered:
1 Yes
2 Unnecessary to answer
3 No
4 Unnecessary to answer
5 Unnecessary to answer
6 Unnecessary to answer
Representation:
Counsel:
Plaintiff : Ms M R Bloch
First Defendant : Mr S M Standing
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Solicitors:
Plaintiff : M R Bloch
First Defendant : Freehills
Second Defendant : Murie and Edward
Third Defendant : Murie and Edward
Fourth Defendant : Murie and Edward
Case(s) referred to in judgment(s):
Carrodus v Carrodus [1913] VLR 1
Ford v Keenan (1914) 30 NSW WN 214
(Page 3)
Gibbons v Gibbons [1920] 1 Ch D 372
Lehman v Haskard, unreported; SCt of NSW; Equity Div; 29 August 1996
Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785
Case(s) also cited:
Edwards v Edwards (1918) 24 CLR 312
MacLaren v Stainton (1858) 27 LJCh 442
O'Hern v O'Hern, unreported; SCt of WA; Library No 7358;10 November 1988
Perpetual Trustees WA Ltd (as Executor of the will of Goyder (dec)) v Goyder & Ors, unreported; SCt of WA; Library No 990138; 24 March 1999
Re Herklot's Will Trusts [1964] 2 All ER 66
Re Sinnamon (dec) [1940] QWN 41
Re Trusts of the Will of Gilchrist (1867) 6 SCR (NSW) Eq 74
The Trustees Executors & Agency Co Ltd v Jope (1902) 27 VLR 706
Thomas v Haworth (1918) 20 WALR 78
Wilkie v The Equity Trustees Executors & Agency Co Ltd [1909] VLR 277
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1 WHEELER J: The plaintiff as trustee seeks directions in the administration of the trust settled by the will of Mr Henry James Darvell ("the deceased"). The deceased died on 22 April 1983. Terms of the deceased's will are, inter alia:
"I GIVE AND DEVISE my real estate known as 48 Henry Street East Cannington and the furniture and other articles of household use and ornament contained therein to my Trustee UPON TRUST to allow the use and occupation thereof to my daughter MARION FAITH DARVELL so long during her lifetime as she chooses to have the same she being liable for the payment of rates, taxes, insurance premiums, maintenance and other outgoings thereon and SUBJECT THERETO I GIVE my residuary estate to such of my children the said ANTHONY JOHN DARVELL, the said MARION FAITH DARVELL, DOREEN DAPHNE LEENBRUGGEN and PATRICIA JUNE BRINDLEY as shall survive me and if more than one in equal shares …"
2 The questions which the plaintiff seeks to have answered are as follows:
1 Whether the first defendant has a life interest in the property at 48 Henry Street, East Cannington ("the property")?
2 Alternatively, whether the first defendant has a right of occupation of the property?
3 Whether the first defendant's interest in the property is conditional on her making payment of the rates, taxes, insurance premiums, maintenance and other outgoings?
4 If her interest is conditional, whether it has lapsed?
5 If the first defendant's interest in the property has lapsed, then a direction that the property be sold and the proceeds distributed between the defendants.
6 If the first defendant's interest in the property has not lapsed, a direction that the plaintiff sell the property and purchase from the proceeds a property for the occupation of the first defendant or, alternatively, invest the net proceeds of sale and pay the income thereof to the first defendant for her lifetime and then upon her death distribute the capital in accordance with the will.
3 Not much background material is necessary. The first defendant is the youngest of the children of the deceased, being 40 years of age at the
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- date of his death. The other children named in the will were 45, 48 and 55 years of age. Anthony Darvell died in 1999 and the second defendant is his executor. The property was apparently purchased in 1964 and was occupied by the deceased, his wife (also now deceased) and the first defendant. Apart from renovations to the kitchen and bathroom in 1964, no further improvements were made to the house by the deceased. While she lived with her parents, the first defendant assisted in payment of insurance and council rates. She spent some sums of money prior to 1984 on what might be described as maintenance work on the house. However in 1985 she became unemployed and has been unemployed, except for a period of approximately four months.
4 It seems not to be in dispute that the property is now in a state of disrepair with rust in the roof and sagging of the roof, some windows being either missing or broken, the house paint being flaked and deteriorated, the garden being very unkempt, and the interior having damage to some walls and ceilings. The first defendant has not punctually paid council and Water Corporation rates. Further, certain insurance for the property has been paid by the plaintiff rather than by the first defendant. There is an affidavit of the first defendant in which she deposes to the reasons for her having fallen into arrears with these payments, and to the arrangements which she has made and is in the process of carrying out to discharge those arrears. It is common ground that there is no other trust property.
The nature of the first defendant's interest
5 Questions one and two deal with the same issue. The words "occupy" and "use" are both words tending to suggest that what is intended is not a mere right to reside but the conferral of a life interest: see Gibbons v Gibbons [1920] 1 Ch D 372, Ford v Keenan (1914) 30 NSW WN 214, Lehman v Haskard, unreported; SCt of NSW; Equity Div; 29 August 1996.
6 It is suggested that one indication that what was intended was something less than a life interest in the property is the fact that the first defendant is to be found among the remaindermen, so that it appears that the testator contemplated that her interest could come to an end during her lifetime. However, this appears to me only a weak indication. It may equally be that the deceased contemplated that the first defendant could have the occupation of, or income from the property during her life but that it would be appropriate to give her the option of foregoing that interest at some stage in favour of a share of the capital, which in that
(Page 6)
- event was to be divided between the deceased's four children equally. It is my view that a life interest in the property in favour of the first defendant was created by the will.
Is the interest conditional?
7 Plain words are required to establish that a requirement such as that found in this will is a condition of the interest continuing rather than in the nature of a direction or expectation: Lehman at page 8, Carrodus v Carrodus [1913] VLR 1. It is suggested that the words "and subject thereto" may be intended to suggest that the interest given is conditional. However, they are oddly placed to perform this task. Appearing where they do in the will they rather suggest that it is merely intended to convey that the gift to the remaindermen is subject to the first defendant's interest so long as she chooses to have it, in contrast to conveying an intention that she could occupy the property subject to her payment of rates. The nature of the duty cast upon the first defendant also makes it unlikely that the duty is imposed as a condition of her life estate continuing. The payment of rates, taxes and probably insurance premiums is a duty which is clear and breach of which is readily ascertainable; however, it seems unlikely that the deceased intended that any failure of maintenance or failure to pay any "other outgoing" of whatever nature should have the result that the life estate would be forfeited.
The trustee's duty
8 The plaintiff is naturally concerned about fairness as between the first defendant and the other remaindermen, and raises the question of what, if anything, should appropriately be done by the plaintiff if the life interest continues, as I have found it does.
9 In some cases, a question might arise as to whether there was power for the trustee to enter the premises and effect repairs and either to recover the cost of those repairs from the first defendant or to make provision for them in some other way. However, I do not think that the issue of repair and maintenance is of present importance in this case. The only evidence which is before me as to the value of the property, is that the house adds nothing whatever to its value and that it would at present be of interest only to a purchaser who wished to redevelop it. A valuation undertaken some years ago suggested that the house might be of some value but that was very limited in comparison to the value of the property as a whole. The present value of the property is said to be in the region of $80,000,
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- while the cost of bringing the house into a good state of repair is estimated at in the region of $85,000. It may be, however, in the light of the first defendant's affidavit that repairs of that magnitude would have the effect of improving the house beyond the state in which it was at the deceased's death. There is no evidence that repairs of any kind, or any cost, would have the effect of adding, significantly or at all, to the present "block value" of the property. In those circumstances, there is no evidence that the failure to maintain is causing any detriment to the remaindermen. It might be seen as a detriment to the first defendant in her enjoyment of her life interest, but it appears that she chooses to remain in the property in its present state, and that is a matter for her.
10 The non-payment of rates and taxes stands in a somewhat different position, in my view. A local authority has power ultimately to ensure that the property is sold in order to recover its unpaid rates. The evidence is that the local authority in this case resolved in March last year to take that course, prior to the current arrangements which have been made for gradual clearing of the rate arrears.
11 At the present time, since satisfactory arrangements appear to have been made for payment of arrears of council and water rates, and since the first defendant deposes in her affidavit that she proposes to continue with those arrangements and that she has made an arrangement to discharge the debt owed to the plaintiff in relation to the insurance, There is apparently no present need for any step to be taken by the trustee in respect of those matters.
12 However, it is of course foreseeable that the first defendant may fall behind in payment of rates in future. Were that to occur, it appears to me that the trustee would have power to make those payments and to look to the first defendant for repayment of those amounts. The power in the plaintiff and the liability of the first defendant in that case would arise under one of two principles. Either because the first defendant in taking the benefit of the life interest is in equity made liable to the obligation imposed by the will, which is enforceable in equity: Perpetual Trustee Co Ltd v Godsall [1979] 2 NSWLR 785 at 793; or alternatively, the case might be one of "salvage" properly so called in that the testator's intention could not be effectuated if the payments were not made in connection with the trust.
13 However, as I have indicated, there appears to be no present need for the plaintiff to make payments in relation to rates, taxes and insurance. It was suggested to me that it would be appropriate for me simply to adjourn
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- any further consideration of this matter for a reasonable period so that the first defendant would have the opportunity to continue clearing those arrears and so that the plaintiff could bring the matter back before the court should there be any failure by the first defendant to do that which she has said she proposes to do. The difficulty with that course, it seems to me, is that if I was to adjourn the originating summons, the question might arise as to whether it would be appropriate to relist the matter before another judge, should I for any reason be unavailable. It is conceivable, given the earlier resolution of the local authority to which I have referred, that it may be necessary at some stage in the future to take action expeditiously to preserve the estate. It therefore seems to me preferable to answer the questions in the originating summons so as to finally dispose of it, and to leave it to the plaintiff to seek fresh relief should the first defendant fail in any of her obligations in the future in a way which threatens the estate.
The proposal for sale of the property
14 It follows from what I have said that there appears to be no pressing need at present to sell the property. The first defendant wishes to remain in it, although if it were to be sold for any reason she would seek to have the plaintiff purchase some smaller and more manageable property in which she could reside in substitution for the property. Because there is no scheme which appears to be acceptable both to the first defendant and to the other remaindermen presently before the court, and because there is no evidence that the estate is presently in jeopardy or that the first defendant cannot continue to reside in the property, it seems to me that it is inappropriate at this stage to consider whether the court has power to order such a sale or whether it would be in the interests of the remaindermen that such a sale and substitute purchase occur.
Conclusion
15 I would therefore answer the questions posed in the plaintiff's originating summons as follows:
1 Whether the first defendant has a life interest in the property situate at 48 Henry Street, East Cannington ("the property")?---Yes.
2 Unnecessary to answer.
3 Whether the first defendant's interest in the property is conditional on the first defendant making payment of the rates, taxes,
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- insurance premiums, maintenance and other outgoings on the property?---No.
- 4 Unnecessary to determine.
5 Unnecessary to determine.
6 Unnecessary to determine.
7 I will hear counsel as to the costs of the application.
16 I should indicate my preliminary view that the application was made necessary by the failure of the first defendant to comply with the obligations which the will imposes on her, which failure at one stage appeared to put the interests of the remaindermen in jeopardy. As a matter of first impressions it would appear to be a case in which it would be appropriate to order that the costs be paid from income or from the first defendant's share of capital.
8