Re: Leaver

[1997] QSC 14

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No. OS 932 of 1995

Before the Hon. Mr Justice Mackenzie

[re: Leaver]

IN THE MATTER of the Will and Codicil of COLIN
  WILLIAM JOHN LEAVER, deceased, late of Tomewin,
  Upper Currumbin in the State of Queensland, Teacher

AND:

IN THE MATTER of an application by
  JOHN GERARD McDONALD, the Executor and Trustee of
  the said Will and Codicil

JUDGMENT - MACKENZIE J.

Judgment delivered 14 February, 1997

CATCHWORDS:           WILLS - application by executor and trustee - construction of codicil and directions as to price at which property the subject of the will might be sold - phrase: "honor the proposed sale" ... "if he still wants it on his return from overseas".

Counsel:  Mrs D Mullins for applicant executor
  P. Matthews for the respondent Dr W.R. Johnston
  R. Bowden for the respondent D.D. Hall

Solicitors:  Stubbs Barbeler Grant for the applicant executor
  W.J. Purcell Chadwick & Skelley for the respondent Dr W.R. Johnston
  H.W. Smith for the respondent D.D. Hall

Date of Hearing:                7 February 1997
IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No. OS 932 of 1995

Before the Hon. Mr Justice Mackenzie

[re: Leaver]

IN THE MATTER of the Will and Codicil of COLIN
  WILLIAM JOHN LEAVER, deceased, late of Tomewin,
  Upper Currumbin in the State of Queensland, Teacher

AND:

IN THE MATTER of an application by
  JOHN GERARD McDONALD, the Executor and Trustee of
  the said Will and Codicil

JUDGMENT - MACKENZIE J.

Judgment Delivered 14 February, 1997

This is an application by the executor and trustee of the will and codicil of the testator.  The two questions for determination in terms of the summons are:-

(a)a declaration as to the proper construction of Clause 8 of the codicil dated 7 September 1992;

(b)directions as to the price at which the executor and trustee may sell a specified parcel of land to William Ross Johnston pursuant to Clause 8 of the codicil.

The codicil is hand-written and includes the statement that it has been executed because the testator had had a "small heart attack" that day.   In the event he passed away two days later on 9 September 1992.  Clause 8 is in the following terms:-

"8.  That the trustee honor the proposed sale to William Ross Johnston University Lecturer of St Lucia of the approximately 10 acre block if granted by Albert Shire council referred to as the "Top Block" if he still wants it on his return from overseas otherwise this property is to be sold and a half share of the proceeds are to go to David Dean Hall and the other half share be given to Andrew Keith Pittman."

Certain material in affidavits on behalf of Mr Johnston was objected to on the basis that extrinsic evidence could not be led.  However I am of opinion that such evidence is necessary to enable a proper understanding to be reached of what the testator meant by "the proposed sale to William Ross Johnston".  It is generally not appropriate to admit direct evidence of the testator's intention but it is plain that the notion of honoring a proposed sale requires an understanding of the context in which the testator used those words.  The evidence established that conversations had occurred over a period of time between the testator and Dr Johnston who shared a concern over the environmental preservation of the land in the future.  The last conversation was on 26 July 1992 shortly before Dr Johnston was to depart for four months on long service leave.  The major passage of Dr Johnston's evidence on this aspect of the matter is the following:-

"John always needed money.  He was a poor person.  He had a lot of land.  I had frequently loaned him money to pay his car registration and so on.  He had a heart attack or two beforehand.  He was not all that well a person.  He wanted to leave me land, to transfer this land to me and he had discussed making a down payment.  By 26 July we had agreed there would be a first instalment of 10,000, but in earlier conversations sometimes he was saying $100 a week.  That would be enough to keep him going and I said, "John's that's silly.  That's too low.  I will pay you $200 a week." - yes, a week, so that we would be talking about $10,000 a year, so that he would have something to survive on, and on that last occasion, because he knew I was going away overseas for four months he said on the 26th, "Right, I know you want the land.  I know you will appreciate and love the land.  I will get everything ready for you by the time you're back.  We'll agree now that I will transfer that land to you.  I will do so so that when you are back, everything will be in place."  There had to be certain things to be sorted out, and that's why there was that delay.  He said, "While you are away I will have it all finalised and arranged with National Parks.  Get approval with the surveyor.  There were difficulties about access to the block with the neighbour to the top.  I will get that sorted out.", he said.  And there were difficulties about electricity.  He wanted to sort that out.  So there were a number of these little things.  He said, "I will get all this arranged and by the time you return in November it can all be signed, sealed and delivered."  He said, "On that payment, we agree now that on that payment of $10,000 the land will be transferred to you, but I will also want a properly executed agreement through Mr McDonald that I will continue to pay $10,000 a year."  That could be in weekly, fortnightly or a lump sum statement, and that is the basic gist of the agreement.  He did also say, "However, if I were to live for 100 years, I wouldn't expect you to keep paying."  The word $50,000 was used as an ultimate cap, but also $60,000 was on an earlier occasion."

He maintained under cross-examination that he understood the upper limit following the conversation on 26 July 1992 to be $50,000 although $60,000 had been mentioned on previous occasions.  He conceded that it had not been finalised whether payments after the initial deposit would be weekly, fortnightly, or annually.  When asked what the testator said to give him the understanding that the upper limit would be $50,000 he replied in the following terms:-

"... Only along the words that John was a kindly person who didn't spell - who didn't say, "This is what the agreement is.  One, you will pay this.  Two, you will pay $50,000."  We understood one another in that sense; that I was happy with the way the discussions had been going; that I had suggested I pay up to $10,000 - that 10,000 - when you initially talked about 100 a week, that was earlier.  I said, "John, that is too little.  I can pay 200." 

So, you would be happy with what he had presented you when he went to Mr McDonald and got an agreement?-- Yes."

Leslie Edward Saunders who was also present during that conversation gave the following evidence concerning it in cross-examination on his affidavit:-

" ... he said the reason he didn't want any bulk money was because he is too weak with his money.  He would give it to people who needed it or wanted it, or whatever, so he only wanted initially $100 a week, just living money, I guess.  But Ross Johnston suggested, and I think I said something in the lines too, that $100 a week is not very much; perhaps $10,000 was more realistic.  I was playing advocate for John.  That is the agreement they came up with, $200 a week per annum, unless John died in the meantime, in which case the debt was forgiven.

...

When you say that, they made the decision that Mr Leaver would go and see Mr McDonald and get some documents drawn up?--  No, no, no, Ross Johnston would buy the land off John for the $10,000 per annum unless he died.  Then they talked about what happens if John doesn't die in the meantime and John said somewhere in the vicinity of 50 or 60,000 and I think Ross Johnstone said something about, "That suits me."  And that's when John said, "Well, I'll see a solicitor and have it all sorted out."

It was left up in the air whether it would be 50 or 60,000?-- Yeah."

I accept that there was a conversation on 26 July 1992 during which the testator indicated that he was willing to transfer an as yet unsubdivided portion of land to Dr Johnston in return for his paying him sums of money during the testator's lifetime.  I am satisfied that the question of the upper limit of the period for which moneys would be payable was discussed but I am not satisfied that the upper limit of the obligation had been finally settled when the conversation finished.  In addition to the passages of verbal evidence quoted above, this view is reinforced by correspondence passing between solicitors.  On 14 October 1993 Dr Johnston's solicitor referred to the agreement being that in consideration for transfer of the land Dr Johnston would pay to Mr Leaver "the sum of $10,000 per year for the balance of his life to a maximum of $50,000 (or $60,000)."  On 11 February 1994 a letter from Dr Johnston's solicitors refers to an agreement in principle "that a price of around $50,000 would be paid"(my underlining) for the land.  The last mentioned letter was followed on 16 February 1994 with a further letter from the solicitors stating that their client had pointed out an error appearing in that letter.  It said that "the price discussed between our client and Mr Leaver was in fact $10,000 and not $50,000".  An affidavit by the solicitor refers to the passage quoted above and states that the figure of $50,000 appearing in that letter appeared in error and contrary to the instructions of his client.  In the circumstances, I place no great weight on the letter except to note that the word "around" was used in conjunction with the erroneous figure of $50,000.
          In the affidavit upon which Mr Saunders was cross-examined the following paragraph appears:-

"... They discussed whether the Deceased would need $100.00 per week or $200.00 per week and eventually it was agreed that Johnston would pay the Deceased $10,000.00 per year for the rest of the life of the Deceased in exchange for the Deceased transferring ownership of the land to Johnston.  If the Deceased died the debt would be forgiven.

e.  Once agreement had been reached between the Deceased and Johnston about the size of the annual payment there was some discussion about whether there should be an upper limit to the payments.  Figures of $50,000.00 and $60,000 were discussed.  No agreement was reached either as to an upper limit on payment or as to whether an upper limit was needed."

I am also satisfied that the testator wished to have the proposal put into proper legal form to ensure that his entitlement to be paid moneys as the years progressed was guaranteed.  I am not satisfied that the arrangement was intended to be operational before that was done.  There is no evidence that any money referable to the agreement was ever paid to the testator or his estate.  The words of Clause 8 also suggest that the arrangement was in the mind of the testator still contingent.  The notion in the Clause is that the trustee "honor the proposed sale" of the land to Dr Johnston "if he still wants it on his return from overseas".  It was submitted that the words last quoted were merely designed to allow Dr Johnston to withdraw from a concluded bargain if he wished to do so upon his return.  That is not the natural meaning of the words in the context.  Those words, together with the description of the transaction as a "proposed sale" indicate that there is an acknowledgment that the proposal had reached a fairly advanced stage but had not reached the point of an enforceable agreement. 
          In my view Clause 8 should be construed as a direction to the trustee to give to Dr Johnston a preferential opportunity to purchase the parcel of land if he wishes.  If the land is not sold to Dr Johnston it is to be sold and the proceeds divided between the two named beneficiaries.  There is evidence that one of the underlying motives in the proposed transaction was to promote the preservation and regeneration of the natural vegetation on the land.  The trustee is obliged to sell the land at a price consistent with his duty as trustee.  The absence of agreed terms for the sale has that result.  If all possible beneficiaries of a sale to a person other than Dr Johnston shared the view advanced in these proceedings as to the testator's motivation it would be open to them to consent to a sale at a particular price to Dr Johnston and to authorise the trustee to proceed accordingly.  Otherwise the price at which he sells it is governed by his view of what is consistent with his duty as a trustee selling property for the benefit of beneficiaries.  I make the following declarations:-

1. I declare that Clause 8 of the codicil dated 7 September 1992 should be construed as directing the trustee to give to William Ross Johnston a preferential opportunity to purchase the parcel of land referred to therein.   If the said William Ross Johnston does not wish to purchase the land at a price acceptable to the trustee he sell the property in a manner and at a price consistent with his duty as trustee and dispose of the proceeds in accordance with Clause 8. 

2. I declare that the price at which the parcel of land is to be sold is a price consistent with the trustee's duty as trustee. 

   I will hear the parties as to costs.