Re Prior; Niran v Prior & Anor
[2022] VSC 31
•7 February 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2021 01481
IN THE MATTER of the will and estate of MICHAEL FREDERICK PRIOR (deceased)
AND IN THE MATTER of an application under r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) for the determination of questions arising in administration of the within deceased estate
| TAHL NIRAN (who sues in his own right and in his capacity as one of the executors of the will and estate of MICHAEL FREDERICK PRIOR, deceased) | Plaintiff |
| v | |
| DAVID JAMES PRIOR (who is sued in his capacity as an executor of the will and estate of MICHAEL FREDERICK PRIOR, deceased) | First Defendant |
| STEPHEN CHARLES PRIOR (who is sued in his capacity as an executor of the will and estate of MICHAEL FREDERICK PRIOR deceased) | Second Defendant |
---
JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 October 2021 |
DATE OF JUDGMENT: | 7 February 2022 |
CASE MAY BE CITED AS: | Re Prior; Niran v Prior & Another |
MEDIUM NEUTRAL CITATION: | [2022] VSC 31 |
---
WILLS – Construction and interpretation – Construction of condition subsequent – Whether legally enforceable obligation intended – Certainty – Interpretation of “use” in condition subsequent – Consideration of surrounding circumstances – Whether condition subsequent would give rise to personal obligation or defeasance - Wills Act 1997 (Vic), s 36 – Clayton v Ramsden [1943] AC 320 – Craven v Bradley [2021] VSC 344 – Muschinski v Dodds (1985) 160 CLR 583.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R R Boaden of counsel | Moores Lawyers |
| For the Defendants | Mr D J Sanders of counsel | Wisewould Mahony |
TABLE OF CONTENTS
Evidence............................................................................................................................................... 1
Background......................................................................................................................................... 1
The Will.......................................................................................................................................... 5
Applicable legal principles.............................................................................................................. 7
Submissions by Tahl......................................................................................................................... 9
Submissions by David and Stephen............................................................................................ 11
Analysis.............................................................................................................................................. 16
Conclusion......................................................................................................................................... 20
(a)....... What is the meaning, nature and extent of the condition?.............................. 20
(b)...... Is the condition valid and enforceable?.............................................................. 20
(c)....... Is the condition a condition precedent or a condition subsequent?............... 20
(d)...... Is the condition expressed with sufficient certainty to operate as either a condition precedent or a condition subsequent?................................................................ 20
(e)....... Does the condition fail for uncertainty?............................................................. 20
(f)....... What (if any) obligation did the condition impose on the Plaintiff?............. 20
(g)...... Did the condition require the Plaintiff to grant:............................................... 21
(i)............ an exclusive licence?............................................................................ 21
(ii)........... a licence in writing?............................................................................. 21
(h)...... To whom did the Plaintiff owe any obligation under the condition?........... 21
(j)........ If the Plaintiff failed to satisfy any obligation imposed upon him by the Condition.................................................................................................................................. 21
(i)............ does the gift of the [testator’s interest in the Britannia Ridge] property fail?................................................................................................................ 21
HER HONOUR:
A dispute has arisen regarding the will of an artist, Michael Fredrick Prior (deceased). His stepson, Tahl Niran, seeks directions from the Court as to how it should be construed. Mr Prior’s brothers, David and Stephen Prior, are the defendants. They say that Mr Niran has not complied with a condition in the will (the ‘Will’) and accordingly forfeits his half-interest in a property contained in the deceased estate.
A staged approach will be taken to determine the issues in dispute. In the first stage, the proper construction of cl 3(1)(b) of the Will (the ‘condition’) will be determined. The Will is dated 9 April 2019.[1] It states that the testator gives his:
…fee simple interest in the land at 160‑180 Tarrango Road, Yarra Junction in the State of Victoria to Tahl, but not the contents of three shipping containers located on the land, on the condition that Tahl grants a licence for my Executor(s) to use the property at 129 Waverley Road, Malvern East in the State of Victoria rent free for a period of two years from the date of my death with all rates, insurance premiums, maintenance costs and other outgoings paid from my Residuary Estate; (underline added)
[1]Exhibit “TN-1” to the affidavit of Tahl Niran affirmed on 7 May 2021.
The issue of whether or not there has been compliance with the condition, as construed by the Court, will be determined at the next stage, if necessary.
Evidence
Each party filed affidavits. To avoid confusion, I shall refer to parties by their first names. I shall refer to the late Michael Prior as ‘the testator’.
Tahl relies upon his affidavits affirmed on 7 May 2021 (‘Tahl’s first affidavit’) and 30 July 2021 (‘Tahl’s second affidavit’).
Stephen and David rely upon their respective affidavits both sworn on 2 July 2021. I shall refer to these respectively as ‘Stephen’s affidavit’ and ‘David’s affidavit’.
Background
The following is common ground, and emerges from the affidavit evidence.
The testator and Rosa Niran, Tahl’s mother, were domestic partners since approximately 1996.[2] The testator and Rosa were both artists.[3]
[2]David’s affidavit, [4].
[3]Ibid, [7].
The testator and Rosa resided at 129 Waverley Road, Malvern East (the ‘Residence’).[4]
[4]Ibid, [5]; Tahl’s first affidavit, [11].
Rosa died on 15 December 2013.[5] She had earlier made a will dated 17 July 2013 appointing the testator and Tahl as her executors.[6] Probate was granted to them on 5 September 2014.[7]
[5]David’s affidavit, [2]; Tahl’s first affidavit, [3].
[6]Tahl’s first affidavit, [11].
[7]Ibid, [46(g)].
By her will, Rosa gave:
(a) the testator a life interest in the Residence;
(b) the remainder interest in the Residence to Tahl; and
(c) her residuary estate to the testator and Tahl in equal shares. It included the land known as 160-180 Tarrango Road, Yarra Junction (‘Britannia Ridge’). The deceased estate includes the testator’s half-interest in Britannia Ridge inherited from Rosa.[8]
[8]David’s affidavit, [5].
In early January 2019, the testator engaged Daniel Bornstein, a photographic student, to complete a book that the testator was writing, namely, ‘Death of an Alchemist’. He gave Daniel keys to the Residence to do the work.[9]
[9]Ibid, [20].
In early January 2019, the testator also engaged a specialist bookbinder, Nick Doslov, to cover and bind the books, once Mr Bornstein had finished printing them on equipment at the Residence. He was also given keys to the Residence.[10]
[10]David’s affidavit, [21]; Tahl’s second affidavit, [7].
Many people over the years were given keys to the Residence.[11]
[11]Tahl’s second affidavit, [7].
On 9 April 2019, approximately six weeks’ prior to his death, the testator made his Will.
Pausing there, it is unnecessary here to recite the degree of access given to Mr Doslov and Mr Bornstein after the testator made his Will. It was after the testator had made his Will, namely on about 6 May 2019, at Tahl’s instigation, that the locks to the Residence were reconfigured.[12]
[12]Tahl’s second affidavit, [11].
The testator resided in the Residence until shortly before his death on 28 May 2019.[13] Approximately seven months later, in December 2019, Tahl moved into the Residence.[14]
[13]David’s affidavit, [5].
[14]Tahl’s second affidavit, [6].
The personal property of the testator contained in the Residence was voluminous. The testator had collections of items related to his various interests across engineering, science, photography, art, and literature. There were also collections of many tools to support his metalwork and photographic interests, together with various raw materials.[15] With respect to the testator’s personal property, David deposes that:
[15]David’s affidavit, [7].
Michael and Rosa were both artists. Michael was a well-known photographer and sculptor and had extensive interests across engineering, science, photography, art and literature. Michael’s personal property, contained in the Residence was unusually extensive. Michael had many collections of items related to his various interests. There were also many tools and collections of tools to support his metal work and photographic interests, together with various raw materials and items that had been made. His works, especially his photography, were publicly displayed at various times and galleries.
It is hard to overstate the volume and extent of Michael’s property that was within the Residence. It included:
(a)approximately 15,750 books. My estimate is based an [sic] accurate measurement of 525 lineal metres of book and library shelving of which 75% was taken up with books at a calculated average of 40 books per metre;
(b)approximately 600,000 photographs or images on various computers and devices;
(c)Rosa’s art room, filled with 15 trestle tables, artist’s materials, frames, canvases, brushes, an artist’s easel, colour printers and 15 large potted plants;
(d)a large collection of rare and valuable silver smithing tools;
(e)a photographic darkroom with tanks, troughs, chemicals and developing equipment;
(f)approximately 50 cubic metres of general tools, plumbing tools, pipes and fittings;
(g)photographic equipment, studio lighting, studio flash gear, backdrops, stands and tripods;
(h)a large collection of costumes, mannequins and shoes for dressing models for photography;
(i)approximately 25 valuable cameras together with a vast array of lenses and other accessories;
(j)two compactus storage units filled with photo prints, negatives;
(k)approximately 400 bottles of wines and spirits;
(l)an extensive quantity of silver coins and wrought silverware;
(m)extensive storage racking and shelving up to 4m high;
(n)2 full sized refrigerators and smaller fridge used for storing photographic film;
(o)extensive furniture including a 5m boardroom table and 10 chairs, antique Queen Anne dining table and chairs, 3 large screen tv’s [sic], king beds and mattresses, book cabinets, 40 free standing bookshelves, 4 three-seater couches, antique dresser unit, 250m of fixed bookshelves lining many of the walls, and a large double sided wardrobe unit (16 cubic metres);
(p)workbenches, toolchests, tool trolleys and ladders; and
(q)various domestic items, crockery, cutlery, appliances, refrigerator, etc.
When Stephen and I had to move Michael’s property from the residence, it required:
(a)a large 60 cubic metre removal truck with 5 professional removalists for 6 days;
(b)approximately 10 carloads of items;
(c)three tandem trailer loads of furniture;
(d)a smaller 16 cubic metre van owned by me that was used to move ten loads of tools and equipment;
(e)approximately 20 cubic metres of unwanted items and rubbish were taken to the tip or otherwise disposed of;
(f)a large quantity of domestic and kitchen items were donated to charity.
Despite all of the effort set out in paragraph 9 above, there were still items left at the Residence that require special handling, including a large safe that will have to be craned out, a large Masonic triptytch wall hanging and workbench.[16]
[16]Ibid, [7]-[10].
Probate has been granted. Each of the parties is an executor of the Will and deceased estate.[17]
[17]Exhibit ‘“TN-2”‘ to Tahl’s first affidavit, probate parchments dated 12 July 2019 and 9 December 2019.
The Will
The Will names each of the parties as executors and beneficiaries to the Will.
Clause 2.1 appoints the parties as executors and trustees of the Will. Clause 2.2 provides that in the event of any disagreement between executors, the decision of the majority shall prevail.
Clause 3 of the Will is titled ‘Specific gifts’. Clause 3.1 includes the condition outlined above, as well as other specific gifts. For instance, cls 3.1(c)–(e) provide:
my collection of coins of any metal, my silver bullion, my purchased wrought silver and silverware to Stephen, save and except [sic] my stock of silver metal bar, sheet and wire using for silver smithing;
all of my tools and my stock of silver metal bar, sheet and wire used for silver smithing to David;
any artwork created by my late de facto partner, Rosa Niran, to Tahl;[18]
[18]The Will, 3.
Clause 3.2 provides that the executors may, at their discretion, engage Mr Bornstein to use the testator’s photography equipment to “archive, catalogue and promote my artwork (whether created by me or others)” and to pay for those services from the funds held as part of the deceased estate.
Clause 4 of the Will is titled ‘Trusts’. Amongst other things, it gives shares in R.J.T. & Associates Pty Ltd to Tahl, and gives shares in Prior Art Pty Ltd to his executors.
Clause 5 is titled ‘Estate to my executor(s) on trust for sale’. Clause 5.1(a) gives the executors power to sell, call in, and convert into money, all the testator’s real and personal estate not specifically disposed of in the Will. Clause 5.1(a) gives the executors power to postpone the sale. Clause 5.1(b) gives the executors power to pay various costs, such as funeral expenses.
Clause 5.2 includes reference to the condition in cl 3.1(b). It follows:
Subject to the payments referred to in clauses 3.1(b) and 5.1, my Executor(s) shall hold the residue of my estate (my Residuary Estate) on the following trusts:
(a)On trust for such of my brothers David and Stephen who survive me for 30 days, equally as tenants in common; and
(b)If any of my brothers fail to survive me for 30 days and leave children who survive me, then those children who survive me for 30 days and attain the age of 18 years take (if more than one equally as tenants in common) absolutely the share of my Residuary Estate which their father would have taken had he survived me and attained a vested interest; and
(c)If the above dispositions fail, then I gift my Residuary Estate to the University of Melbourne of Grattan Street, Parkville, Victoria ABN 84 002 705 224, for the general purpose of the University, and the bequest is to be known as ‘The Michael Fredrick Prior Bequest’.[19]
[19]Ibid, 4.
Clause 6 gives the executors general powers in dealing with the deceased estate.
Clause 7 relates to superannuation.
Clause 8 is titled ‘Family provision’. Clause 8.2 includes a statement that the testator believes that Rosa’s children, Tahl and Joel, “have been adequately provided for by distributions from the Niran Family Investment Trust, which will be controlled by Tahl after my death”.
Here, it is common ground that:
(a) the Will is poorly drawn and does not prescribe what the licence will be, nor its purpose;
(b) the structure of the Will as a whole is a relevant factor to consider in construing the condition;
(c) it is permissible to consider that the testator owned extensive personal property that was located at the Residence, and to understand that the words appearing in the Will were directed to making arrangements for this property to be conveniently administered by his executors;
(d) the condition operates as a condition subsequent rather than a condition precedent;
(e) the condition is not for the grant of an exclusive licence; and
(f) the condition does not require a suitable licence to be in writing.
Applicable legal principles
The principles of construction were not in dispute.
Derham AsJ recently summarised the applicable principles in Craven v Bradley.[20] I adopt that summary.
[20][2021] VSC 344.
…as McMillan J said in Re Niall, in construing a will, the task of a court is to give effect to the testator’s intention through examination of the words used in the will, having regard to the will as a whole, aided as necessary by any admissible extrinsic evidence. Prima facie, the words of a will must be given their ordinary meaning.
Some further relevant principles are, at the expense of some repetition or overlapping, as follows:
(a)The interpretation of a will is analogous to the interpretation of a contract. This brings with it a consideration of the purpose of the will, or the purpose of its particular provisions, as well as the facts known or assumed by the maker at the time that the will was executed, applying common sense and ignoring evidence of subjective intention. No will is made in a vacuum.
(b)The testator’s intentions are not necessarily to be discovered by looking at the literal meaning of the words alone, if this leads to the frustration of their intentions. If, in the light of the surrounding circumstances, the literal interpretation gives rise to a capricious result which the testator can never have intended, then the literal interpretation should be rejected in favour of a sensible interpretation which accords with their intention.
(c)If the law has consistently given a particular meaning to some word or phrase, that is the meaning which the word or phrase must, prima facie, be given.
(d)It is open to the Court, in construing a will, to insert missing words which are clearly necessary to give effect to the testator’s intention.
(e)If, in the context of the will read as a whole, and of the surrounding circumstances, the ordinary meaning of the words in the will do not make sense, extrinsic evidence is admissible under the ‘armchair principle’. In effect, the court is able to consider evidence of the circumstances surrounding the testator at the time of executing the will.
(f)A court is not entitled to rewrite a will merely because it suspects the testator did not mean what is said in the will.[21]
[21]Ibid, [74]-[75] (citations omitted).
Section 36 of the Wills Act 1997 follows.
When is evidence admissible to clarify a will?
(1)In any proceedings to construe a will, if the language used in a will renders the will or any part of the will—
(a) meaningless; or
(b) uncertain or ambiguous on the face of the will; or
(c)uncertain or ambiguous in the light of surrounding circumstances—
evidence may be admitted to assist in the interpretation of that language.
(2)Evidence which may be admitted under subsection (1)(c) does not include evidence of the testator’s intention.
(3)Nothing in this section prevents the admission of evidence which would otherwise be admissible at law in any proceedings to construe a will.
It is common ground that I should disregard any affidavit evidence regarding the alleged subjective intention of the testator regarding his Will.
It is common ground, and I accept, that the condition is a condition subsequent not a condition precedent.
The parties cited, and I adopt, the following description of conditions in Muschinski v Dodds:[22]
… A condition annexed to a gift may be of either of two kinds: a condition involving a forfeiture for non-fulfilment or a condition creating merely a personal obligation to fulfil it. A donee who takes a gift to which a condition of the latter kind is annexed incurs an equitable obligation to perform the condition…[23]
[22](1985) 160 CLR 583.
[23]Ibid, [9].
Submissions by Tahl
The key submissions made by Tahl follow.
He summarises the condition as being that “Tahl grants a licence for my Executor(s) to use the property [the Residence]… rent free for a period of two years from the date of my death….”[24]
[24]Written submissions filed by the plaintiff on 26 August 2021, 8.
Firstly, the Will contains no details about the intended licence and does not state the purpose of the licence. In the circumstances here, the testator’s intention must have been that:
(a) the entire Residence be subject to the licence, but it was not an exclusive licence;
(b) the permitted use be consistent with Tahl using his own property for his residential purposes; and
(c) the purpose of the licence being to give the executors two years in which to deal with and remove the plethora of the testator’s personal property at the Residence.
Another way in which the condition may operate is to impose in equity, an obligation. For instance, where the testator gives real property to their child on the condition that the child pay an annuity of $1,000 per month to the testator’s widow. The donee then has a choice as to whether to accept the gift. If they do, then equity imposes an obligation on the donee to comply with the condition. Here, it is simply unwarranted to treat the words of the Will as making a conditional gift. As discussed next, the condition does no more than impose a personal obligation on Tahl.
Secondly, the condition imposed is a personal obligation upon Tahl to give a personal right (rather vague and imprecise) to the executors to use the Residence rent-free for a period of two years from the date of the testator’s death. This construction arises from the structure and language of the Will. The imprecise language of the condition was directed to facilitating the itemising and removing of the testator’s personal property from the Residence within two years of the date of the testator’s death. The condition, properly construed, gives equal rights to both sides. They co‑exist on an equal basis. Neither takes priority. The executors have the right to administer the estate and that right must be exercised consistently with Tahl’s right to reside in the property. This is consistent with construing the condition as a personal obligation as opposed to what the defendants contend, namely, that the condition operates by defeasance and would involve forfeiture for non-fulfilment.
The nature and origin of the gift to which the condition was attached, namely the gift to Tahl of the half-interest in the Britannia Ridge property, is relevant. The property originally came to the testator from Rosa’s superannuation fund.
Construing the condition as capable of bringing about forfeiture of the gift of Britannia Ridge would give it serious and fundamental operation in relation to real property. On the other hand, construing it as a personal obligation leaves it operating in the same field as the licence which it envisages, namely the field of mutual personal obligations. To insinuate otherwise is not comparing like with like. Treating the condition as a personal obligation means it operates in the same context as the licence. The licence deals with personal chattels and gives the executors a personal right in return for an obligation imposed by the condition. This is surely the proper construction to place on the condition, understanding the language in the context of the testator having extensive personal property which his executors would have to deal with in the two years following his death.
Thirdly, the condition could only operate as a condition subsequent for defeasance of the gift, as opposed to a condition precedent. The conditions which may lead to defeasance must be framed with sufficient certainty such that the donee knows, from the outset and with certainty, the exact event on the occurrence of which the donee’s interests are to be divested.[25] That is, the donee must know from the outset, with certainty, what may imperil the gift. The condition fails to do that at all. There is heated disagreement as to whether the condition has been breached. The defendants submit that the event was “anything that prevented the personal representatives from administering the estate property located in the Residence in the manner that the majority of the personal representatives required”. That submission is unrealistic and fanciful. Tahl should not, for instance, lose the entire devise of Britannia Ridge if he wrongly decides to limit the executors’ licence to using the back door when they wish to remove items through the front door. Rather, the appropriate remedy would be for breach of a personal obligation, namely an order that he pay equitable compensation.
[25]Clayton v Ramsden [1943] AC 320, 326.
Submissions by David and Stephen
The key submissions made by David and Stephen follow.
Firstly, the purpose of the licence contained in the condition, and its terms, are apparent from considering the Will as a whole. There is sufficient certainty.
The underlying property and the rights of the grantor are clear: the Residence, which Tahl owns upon the death of the testator.
The purpose of the licence is clear. It is given to the executors. It is not granted to anyone personally, but to the personal representatives of the estate for the time being in their representative capacity. It is for the purpose of properly administering the estate. A factor to take into account is what the administration of the estate would entail. A core requirement of the licence must be to give primacy to the proper administration of the estate. The administration of the estate must have paramountcy over how the Residence is used. That is not inconsistent with Tahl’s right of residence, but it does limit it.
The licence must allow the executors to “use” the Residence. There are no restrictions on the use, although it must be for the purpose of administering the estate. It must be freely available to use, as there are no limitations placed on the use other than for the purpose of the licence. For example, access at will for the purpose of preparing items for sale, such as sorting and valuing, and staging for removal or auction. The items must be individually accessible, and without appropriate space available, all these tasks cannot be achieved. There is nothing unusual about the nature of these tasks: they are the ordinary tasks that executors undertake when there are large volumes of personal property of unknown value, and they are the tasks necessarily required for executors to fulfil the duty to administer the estate to the required standard of a prudent businessperson.
The volume and nature of the testator’s personal property is hard to overstate. The bulk of those items (by volume, weight and quantity) are held in the residuary and gifted to Stephen and David. Tahl has no beneficial interest in these items, although as an executor he has fiduciary obligations.
The term of the licence is clear: two years from the date of the testator’s death. This gives subjective confirmation to the construction of the purpose and use. It is clearly envisaged that a licence allows for orderly dealing with the personal property in a manner that is more than simply removing them to somewhere else. The latter task would take weeks, not two years. The estimate of two years for sorting and preparing the personal property for sale or promotion was reasonably required. Further, no special licence would be required for the executors to merely claim and remove estate property from the Residence and no particular term would be required in that case.
The licence has terms readily implied by law. For example, executors must take reasonable steps to care for the Residence while it is in use or occupation. The licence is not required to be in writing as it is not a lease, and the Will does not require it to be formalised. There are no express or inferred rights to exclusive possession, although clearly the terms of the licence could not allow Tahl to interfere with the administration of the estate by the executors for the time being.
For the reasons outlined above, the condition is that Tahl grant a licence to David and Stephen in their capacities as personal representatives of the deceased estate with the following terms:
(a) the licensor is Tahl;
(b) the subject property is the Residence;
(c) the licensees are the personal representatives of the estate for the time being (other than Tahl), namely David and Stephen;
(d) the licence is for the purpose of administering the estate with the care that an ordinary businessperson would apply to their own business affairs, including taking control of the testator’s personal property, preserving, preparing it for sale, and selling it at a time and in a manner chosen by the executors (the ‘Purpose’);
(e) the licence must allow for the unhindered use of the property for the Purpose;
(f) the term of the licence is two years from the date of the testator’s death; and
(g) the deceased estate is to pay the property outgoings during its use of the Residence.
A failure by Tahl to grant a licence in accordance with these terms is a clear failure to meet the requirements of the condition.
Secondly, the condition is expressed with sufficient certainty, and is a condition subsequent. The effect is that:
(a) Britannia Ridge vests in Tahl if he grants a licence that is consistent with the licence condition;
(b) retention of Britannia Ridge is conditional on Tahl allowing the licence to remain in effect for its term;
(c) if the purpose of the licence is thwarted by Tahl, with the effect that the administration of the estate contemplated by the licence is unreasonably hindered or rendered impossible, then Britannia Ridge must be divested and returned to the residuary estate, or equitable compensation be paid.
If Tahl’s access and use of the Residence hindered the administration of the estate, or put estate assets at risk, that would be inconsistent with the Purpose of the licence and amount to a material breach or repudiation of the licence.
The nature of the licence is sufficiently certain such that the test for initially meeting the condition and continued performance of it is clear. That is, the requirements on Tahl and the consequences of his conduct. Whilst there is a higher standard of certainty for a condition subsequent than for a condition precedent,[26] the “difficulty in answering questions of construction does not mean, in itself, that the condition is void for uncertainty provided that an answer can be given”.[27]
[26]See for instance, National Mutual Trustees Ltd v Gooding [1990] VR 791, 795.
[27]Re Waring’s Will Trusts [1985] NI 105, 113.
Tahl’s submission that the testator wished to give the Britannia Ridge property back because it was Rosa’s cannot be accepted. The intention of the testator as to why he provided the gift is inferential and cannot be relied upon. After such a long relationship between Rosa and the testator, it would be unsurprising that she intended to give the Britannia Ridge property to him and for the testator to do what he wanted with it. It would be an error to rely upon some presumed intention of Rosa.
Thirdly, there is no credible reason to assert that the condition is not valid or enforceable. It is sufficiently clear and ascertainable. There is no public policy issue. Performance of the condition was readily within Tahl’s ability.
Fourthly, the condition imposed obligations on Tahl to:
(a) grant a licence, in accordance with the licence terms, to David and Stephen in their representative capacities; and
(b) continue to ensure the licence remained effective throughout the term of two years.
Accordingly, Tahl owed the obligations to David and Stephen (as personal representatives for the time being) and to the estate, due to the Purpose of the licence to be granted under the condition.
Fifthly, if Tahl fails to satisfy any obligation imposed upon him by the condition, then he will be divested of the property. A critical factor is that the licence has a clear underlying purpose which includes making the Residence available for use by the personal representatives of the estate in their administration of the estate for two years without unreasonable interference by Tahl. The size and extent of the deceased estate is a factor to take into account regarding its proper administration.
The licence was meant to have a substantial benefit for the estate. That benefit is such that the Will, as properly construed, warrants defeasance of the gift if the condition is not met. The licence is not as simple as coming in and out of a particular door. The key word is ‘prevented’. It is more akin to preventing the doors of the Residence being welded shut or requiring a large safe to be brought out of a small window. The licence obliges Tahl not to prevent the personal representatives from administering the estate. It is a question of substantial convenience to the executors. Applying the armchair principle, this was clearly in the contemplation of the testator at the time he made his Will. Defeasance is a natural consequence of the executors being denied the benefit of the condition.
The legal duties of the personal representatives are clear and are not subject to Tahl’s whim or unilateral decisions regarding the estate property. He concedes the licence contemplates the access required by the executors. By the condition, if Tahl let the personal representatives administer the estate at the Residence then he could have the other half of the Britannia Ridge property.
Analysis
As will be recalled, the condition is “that Tahl grants a licence for my Executor(s) to use the [Residence] rent free for a period of two years from the date of my death with all rates, insurance premiums, maintenance costs and other outgoings paid from my Residuary Estate” (underline added).
I apprehend that there is a real dispute between the parties arising from the word “use”. The dispute is unsurprising, in circumstances where “use” has been given a technical legal meaning for more than 500 years. Currently, the legal meaning of “use” is the “right to benefit from”; “to employ or utilise”.[28] In respect of real property it is “possession and use of land to derive income or other benefits”.
[28]Butterworths Australian Legal Dictionary.
On the other hand, the plain meaning of “use” is much wider:
1. to employ for some purpose; put into service; turn to account: use a knife to cut; use a new method.
2. to avail oneself of; apply to one’s own purposes: use the front room for a conference.
…[29]
[29]Macquarie Dictionary (online at 7 February 2022) ‘use’ (v, defs 1 and 2).
Here, the words and structure of the Will are inconsistent with the testator’s intention to employ the legal meaning of “use”. Indeed, none of the parties contend that the Residence was to be used by the executors to derive income or some other benefit. Further, the condition provides that the “use” was to be “rent-free”. It does not give the executors a right to possession. It does not displace Tahl’s legal right to use and enjoy his own property. The parties properly agree that the “use” by the executors was to be non-exclusive.
The Will is consistent with “use” having its plain meaning, and in particular to “avail oneself of”. The licence in the condition is for the executors to avail themselves of the Residence for the purpose of the proper administration of the Will.
The testator had in contemplation that his personal chattels were voluminous and that a period of up to two years would be required for the proper administration of his estate. In particular, to archive, catalogue, and promote the artwork he had created and collected, and to sell, call in, and convert it. The structure of the Will is consistent with this. Clause 3.1 of the Will outlines specific gifts of personal chattels, and cl 3.2 provides for archiving, cataloguing, and promoting artwork. Clause 5.1 provides for the calling in and sale of the testator’s real and personal estate. Clause 5.1(a) gives the executors power to sell, call in, and convert into money, all the testator’s real and personal estate that is not specifically disposed of in the Will.
The surrounding circumstances may be taken into account to understand the Will. They are consistent with the testator intending that the licence in the condition be for the executors to avail themselves of the Residence for the purpose of the proper administration of the Will. Turning now to the surrounding circumstances to be taken into account.
As discussed above, the parties agree these include: the testator had lived at the Residence for many years, he was an artist, and had voluminous personal property at the Residence.
Further surrounding circumstances should also be taken into account in interpreting the Will. At the time the testator made his Will, the Residence was owned by Tahl. The testator was residing in the Residence pursuant to the life tenancy given to him by Rosa. The testator’s half-interest in the Britannia Ridge property was valuable. It is a commercial property upon which there is a caravan park. (Some six months after his death, at the time the inventory of assets and liabilities was filed, it was valued at $600,000.[30])
[30]Probate Inventories of Assets and Liabilities, Exhibit “TN-3” to Tahl’s first affidavit.
The testator contemplated that the executors would need to avail themselves of the Residence to properly administer his estate. However, the Residence belonged to Tahl. The testator contemplated that a significant incentive should be given for Tahl to provide a licence for the executors to access the Residence. The balance struck in the Will is provided by the condition. If Tahl elected to provide “‘use” of the Residence, then he would receive the testator’s share of the Britannia Ridge property. The testator contemplated that some certainty would be required around the cost of the executors availing themselves of the Residence for the purpose of administering the estate. The testator struck a balance in the Will regarding costs: the executors’ access would be ‘rent-free’ but rates, insurance premiums, maintenance costs and other outgoings would be paid from the residuary estate.
Consistent with the purpose of the licence, it was not for the executors to freely avail themselves of the Residence. I do not accept the defendants’ submission that “use” means unhindered access. Nor do I accept their submission that “use” should be construed as not causing substantial inconvenience to the executors. The testator would not have contemplated such a subjective meaning. These submissions are inconsistent with the non-exclusive nature of the licence.
Tahl contends that the condition is too vague – although he does not say it is so vague that it is to be void. At the heart of his objections is a complaint about the terms of any licence. His concern is that the licence does not prescribe the terms upon which the executors may avail themselves of the Residence – when they may enter, for how long, and in what manner. However, the sensible interpretation of the licence is that it would be on reasonable terms. The testator must have intended that the parties would agree that the use of the property would be on reasonable terms – on proper notice, of reasonable duration, and at reasonable times. The executors were to avail themselves of the Residence in a reasonable manner that was consistent with the proper administration of the deceased estate and the non-exclusive nature of the licence.
There is a real dispute between the parties as to whether there would be defeasance if Tahl failed to provide the licence. The defendants cite the following principle in respect of a condition subsequent, which I adopt.
a high degree of certainty and precision in the language used is required before it can operate to divest a beneficiary subsequent to that person’s receipt of the property concerned.[31]
…
The courts have always insisted that conditions of defeasance, in order to be valid, should be so framed that the persons affected (or the court, if they seek its guidance) can from the outset know with certainty the exact event on the happening of which their interests are to be divested.’[32]
[31]National Mutual Trustees Ltd v Gooding [1990] VR 791.
[32]Clayton v Ramsden [1943] AC 320, 326.
I find the condition was framed with sufficient certainty and precision so that Tahl knew, at the outset, what would imperil the gift of Britannia Ridge. If he failed to provide reasonable terms for the other executors’ use (to avail themselves) of the Residence for the purpose of the proper administration of the estate, then his interest in Britannia Ridge is divested.
I reject Tahl’s submission that the condition should be construed as one imposing a personal obligation that does not give rise to defeasance but rather gives rise to equitable compensation for breach of a personal obligation. Tahl had an election to make. If he failed to provide the licence, it had the consequence set out in the Will, namely he would be divested of the interest in Britannia Ridge.
Finally, there is one further matter to address. Tahl is an executor of the estate and, accordingly, he has a duty to properly administer the deceased estate. However, the testator must have contemplated that the licence was necessary so that David and Stephen, who were the main recipients of specific gifts and the residuary beneficiaries, could access the Residence for up to two years for the proper administration of the deceased estate.
Conclusion
The answers to the following directions sought in the originating motion follow.
(a) What is the meaning, nature and extent of the condition?
Tahl is given the testator’s interest in Britannia Ridge (but not the three shipping containers located on that land) on the condition that he grants a licence to the executors to use (avail themselves) of the Residence. The licence is not exclusive and consequently, Tahl is able to reside at the Residence consistently with the licence. The licence is to be on reasonable terms – on proper notice, of reasonable duration, and at reasonable times. The licence is for the executors to avail themselves of the Residence in a reasonable manner consistent with the proper administration of the deceased estate and the non-exclusive nature of the licence. The licence is for a period of two years from the testator’s death. The licence is rent-free with all rates, insurance premiums, maintenance costs, and other outgoings paid from the residuary estate. As to the nature of the condition, it is a condition subsequent.
(b) Is the condition valid and enforceable?
Yes (agreed by parties).
(c) Is the condition a condition precedent or a condition subsequent?
Condition subsequent (agreed by parties).
(d)Is the condition expressed with sufficient certainty to operate as either a condition precedent or a condition subsequent?
Yes.
(e) Does the condition fail for uncertainty?
No (agreed by parties).
(f) What (if any) obligation did the condition impose on the Plaintiff?
See paragraph 82 above. It obliges Tahl to grant a licence to the executors to avail themselves of the Residence in a reasonable manner consistent with the proper administration of the deceased estate and the non-exclusive nature of the licence. The licence is for a period of two years from the testator’s death. The licence is rent-free with all rates, insurance premiums, maintenance costs, and other outgoings paid from the residuary estate.
(g) Did the condition require the Plaintiff to grant:
(i) an exclusive licence?
No (agreed by parties).
(ii) a licence in writing?
No (agreed by parties).
(h) To whom did the Plaintiff owe any obligation under the condition?
Executors of the Will (agreed by parties).
(j)If the Plaintiff failed to satisfy any obligation imposed upon him by the Condition
(i) does the gift of the [testator’s interest in the Britannia Ridge] property fail?
Yes.
I will hear the parties on the form of orders consequential to the judgment.
0