Serwin v Dolso

[2020] NSWSC 370

Supreme Court

New South Wales

Medium Neutral Citation:	Serwin v Dolso [2020] NSWSC 370
Hearing dates:	13 February 2020
Date of orders:	07 April 2020
Decision date:	07 April 2020
Jurisdiction:	Equity
Before:	Hallen J
Decision:	The Court: (a) Declares that Stanislaw Habel died before attaining a vested interest in the rest and residue of the deceased’s estate in accordance with Cl 3(c) of the deceased’s Will. (b) Declares that the whole of the rest and residue of the deceased’s estate passes to the Plaintiff, Halina Serwin. (c) Orders that the whole of the Statement of Cross-Claim filed 23 July 2019 be dismissed. (d) Orders that the Defendants’ costs, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate of the deceased.
Catchwords:	SUCCESSION – Will construction – Residuary clause in Will of deceased provides for gift to brother unless “[he] has already died or does not survive me or dies before attaining a vested interest” and then to her niece – Meaning of “before attaining a vested interest”
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 73 Succession Act 2006 (NSW), ss 32, 35, 93 Trustee Act 1925 (NSW), s 63 Uniform Civil Procedure Rules 2005 (NSW), r 54.3
Cases Cited:	Application by Elizabeth Marie Robinson [2015] NSWSC 1387 Arnott v Kiss [2014] NSWSC 1385 Byrne v Macquarie Group Services Australia Pty Ltd [2011] NSWCA 68 Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; [1965] AC 694 Coorey v Coorey (Supreme Court (NSW), Powell J, 22 February 1986, unrep) De Martin v Jacobs [2008] NSWSC 1378 Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111 Fell v Fell (1922) 31 CLR 268; [1922] HCA 55 Hatzantonis v Lawrence [2003] NSWSC 914 Jepson v Bowman [2014] VSC 590 Marley v Rawlings [2015] AC 129; [2014] UKSC 2 Muir v Winn [2009] NSWSC 857 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45 Peoples v Simpson [2005] NSWSC 355 Perpetual Trustee Co Ltd v Wright; Re Will of James Paul Gee Cox Junior, Deceased (1987) 9 NSWLR 18 Pohlner v Pfeiffer (1964) 112 CLR 52; [1964] HCA 8 Re Croxon; Croxon v Ferrers [1904] 1 Ch 252 Re De Bruyn [2016] VSC 6 Re Estate Late Chow Cho-Poon (2013) 10 ASTLR 251; [2013] NSWSC 844 Re Evans; Public Trustee v Evans [1920] 2 Ch 304 Simmons v Ross [2018] VSC 306 Tanner v New Zealand Guardian Trust Co Ltd [1992] 3 NZLR 74 (CA) Thomson v Thomson [2008] VSC 375 Towns v Wentworth [1858] EngR 371; (1858) 11 Moo PC 526 White v Shortall (2006) 68 NSWLR 650; [2006] NSWSC 1379 James v Douglas [2016] NSWCA 178
Texts Cited:	David Hayton, “Uncertainty of Subject-Matter of Trusts” (1994) 110 LQR 335 HS Theobald, SM Cretney and G Dworkin, Theobald on Wills (13th ed, 1971, Stephen & Sons) JR Martin, M Oldham, A Learmonth and C Ford, Theobald on Wills (17th ed, 2010, Thomson Reuters)
Category:	Principal judgment
Parties:	Halina Serwin (Plaintiff) Adriana Margherita Dolso (First Defendant) Caroline June Salvo (Second Defendant)
Representation:	Counsel: Mr K Morrissey (Plaintiff) Ms M Pringle (Defendants)   Solicitors: Dorota Sokolowski (Plaintiff) Willis & Bowring (Defendants)
File Number(s):	2019/178798

Judgment

The Claims

1. HIS HONOUR: In these proceedings, commenced by Summons filed 7 June 2019, Halina Serwin, a niece of Juliana Johnson (the deceased) seeks the opinion, advice and direction of the Court in respect of the following question:

“… whether on the true construction of the will [of the deceased] and in the events that have happened, the plaintiff is entitled to the residue of the estate.”

2. She also seeks:

“A declaration that the phrase ‘dies before attaining a vested interest’ in Clause 3(c) [the Summons having been subsequently amended] of the Will, means ‘vested in possession’.”

3. Whilst the first question was framed as a claim for judicial advice under s 63 of the Trustee Act 1925 (NSW), in reality, and in the events that have happened, the relief sought concerns the proper construction of the deceased's Will made on 20 February 2013 and also a question about administration of a deceased estate.

4. On 21 October 2014, this Court granted Probate in common form of the deceased’s Will to Adriana Margherita Dolso and Caroline June Salvio, the Defendants named in the proceedings.

5. On 23 July 2019, the Defendants filed a Statement of Cross-Claim, in which they sought the following relief:

“1 An order giving the Court’s opinion, advice and direction pursuant to section 63 Trustee Act 1925 or the Court’s inherent jurisdiction, on the questions set out in the Statement of Facts to be filed in these proceedings.

2 A determination pursuant to section 73 Civil Procedure Act 2005 as to whether, and on what terms, the parties to the proceedings have settled the dispute between them; [sic]

3   An order that the parties to the proceedings settled the dispute between them before the Summons was filed by the cross-defendant on 7 June 2019; [sic]

4   Such further determination or order as the Court sees fit.

5   An order that the costs of the cross-claimants be paid out of the estate of the late Julia Johnson.”

6. The questions posed in the Statement of Facts, the original of which was marked as Exhibit D1, and to which I shall later refer, are:

“40 The cross-claimants seek a declaration pursuant to section 63 Trustee Act 1925 or the Court’s inherent jurisdiction, on the question as to who is entitled to receive the rest and residue of the deceased’s estate:

a.   Did the gift of residue of the deceased’s estate to Stanislaw Habel vest before his death?

b.   If the answer to (a) is ‘no’, is the plaintiff Halina Serwin entitled to 100% of the deceased’s residuary estate in her capacity as the ‘heir’ named in the notarial deed of Stanislaw Habel?

c.   If the answer to (b) is ‘no’, is the plaintiff Halina Serwin entitled to 100% of the deceased’s residuary estate in her capacity as the substitute beneficiary named in the deceased’s Will?

d.   If the answer to (c) is ‘no’, are the children of Stanislaw Habel entitled to receive a distribution from the deceased’s estate in the amounts calculated by the Polish Court in the judgment dated 30 January 2018.”

7. On 31 July 2019, the Plaintiff filed a Defence to the Cross-Claim, in which she denied that “any agreement has been concluded or settlement reached between any of the parties because none of the parties accepted the terms of the other’s proposals”. The Plaintiff added that “even if there was an agreement [between a number of named persons] such an agreement has not been accepted by the cross-claimants”.

8. The dispute about whether an agreement had been reached did not remain the subject of dispute at the hearing. Rather, counsel for the parties accepted that the claim for relief under s 73 of the Civil Procedure Act2005 (NSW) was not being pursued: Tcpt, 13 February 2020, p 2(04–09).

9. That this issue was no longer to be the subject of the relief claimed meant that a substantial part of the evidence that had been filed and served, and some of the facts the subject of dispute, were no longer relevant, and were not referred to. It was accepted that the part of the Cross-Claim that referred to that claim for relief (being paragraphs 2 and 3) should be dismissed: Tcpt, 13 February 2020, p 37(39) – p 38(03).

10. At the hearing, Mr K Morrissey of counsel appeared for the Plaintiff/Cross-Defendant and Ms M Pringle of counsel appeared for the Defendants/Cross-Claimants. Prior to the hearing, both had confirmed that the hearing would be concluded within one day. They also agreed that the Court should treat the matters relating to the Will of the deceased as a construction suit rather than an application for judicial advice. As well, counsel for the Defendants referred to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 54.3, which relevantly provides that proceedings may be brought for the determination of any question which could be determined in administration proceedings, including, amongst other things, “(b) any question as to the composition of any class of persons (i) having a claim against an estate, or (ii) having a beneficial interest in an estate, or (iii) having a beneficial interest in property subject to a trust”: Tcpt, 13 February 2020, p 20.

11. The nature of judicial advice proceedings was explained by Lindsay J in Re Estate Late Chow Cho-Poon (2013) 10 ASTLR 251; [2013] NSWSC 844 at [29]–[49]. His Honour noted that, while a construction suit will involve the joinder of parties who have an interest in opposing the relief sought, in judicial advice proceedings the manner in which other parties are given an opportunity to be heard is set out in ss 63(4) to 63(8) of the Trustee Act. As well, the Court’s jurisdiction whether to give advice is discretionary and may not be suitable for resolving disputed questions of fact.

12. Although the other children of Stanislaw were not joined as parties to the proceedings, I am satisfied that all are well aware of the proceedings. In any event, none of them sought to be joined as a party.

The Background and the Context

13. As stated, the Defendants filed and served a Statement of Facts (being Exhibit D1). The Plaintiff, in response, filed and served a Statement of Disputed Facts, a copy of which was marked Exhibit P2.

14. The following facts have been taken from these exhibits. What follows should be regarded as the findings of the Court.

15. The deceased was born in Uszen, Poland, in September 1922 and she died on 27 June 2014, at the age of almost 92. Her parents were Stanislaw and Karolina Habel, both of whom predeceased her. She had one known surviving sibling, Stanislaw Habel (to whom I shall refer as “Stanislaw”). He was born in October 1925, in Poland, where he resided continually until his death, in Poland, on 18 November 2014, at almost 89 years of age.

16. The deceased resided in Australia, continuously, from 1950 and adopted the surname “Johnson”.

17. The deceased was pre-deceased by her first husband, Angelo Josef, whom she married in 1951, and then by her second husband, Lucjan Rgeletski, whom she married in 1975. So far as the evidence goes, she did not marry, or enter into a de facto relationship, at any time thereafter. There were no children of either marriage.

18. On 20 February 2013, the deceased made her last Will appointing the Defendants as her executors (Cl 2(a)). She left the whole of her estate on trust to pay each of the executors a pecuniary legacy of $1,000 (Cll 3(a) and 3(b)). After the gift of the pecuniary legacies, Clause 3(c) of the deceased’s Will provided:

“Subject to the preceding trusts to give the rest and residue of my estate to my brother STANISLAW HABEL of … Poland and in the event that my brother STANISLAW HABEL has already died or does not survive me or dies before attaining a vested interest, to give the rest and residue to my brother’s daughter HALINA SERWIN.”

19. Stanislaw had not died at the date of the deceased’s Will and he survived the deceased. The sole question, the parties agreed, was whether he died “before attaining a vested interest”.

20. Stanislaw was survived by his three children, being Jan Habel, who was born in Poland, in September 1954, and who now resides in Canada; the Plaintiff, Halina Serwin née Habel, who was born in Poland in June 1959, and who continues to reside there; and Bozena Dadej née Habel, who was born in September 1969 and who, also, now resides in Canada.

21. The parties did not require the Court to determine who was to take Stanislaw’s interest, in the event that he was found to have died having attained a vested interest. As counsel agreed (Tcpt, 13 February 2020, p 20(31)–(45)):

“HIS HONOUR: If the proper construction of the will is that the whole of the estate passes to Stanislaw that's the end of it. If, on the other hand, the whole estate passes to Helena that's the end of it.

PRINGLE: Yes.

HIS HONOUR: And I don't need to do anything else, I'm not determining, for example, if it passes to Stanislaw who's entitled to it, I just have to determine it passes to Stanislaw under the terms of the will. Isn't that right?

PRINGLE: Yes.

HIS HONOUR: Mr Morrissey?

MORRISSEY: That's correct, your Honour.”

22. In the Inventory of Property attached to, and placed inside, the Probate document, the deceased’s estate was disclosed as having an estimated, or known, value of $1,951,663. (I have omitted and shall continue to omit a reference to cents.) The estate was said to consist of real estate at Sylvania, a suburb in southern Sydney, New South Wales, about 22 kilometres south of the Sydney central business district (the Sylvania property) ($900,000), and moneys in current accounts and financial institutions on deposit (in total, $1,051,663). There were also personal effects and contents of no substantial value.

23. On 3 November 2014, the Defendants completed the sale of the Sylvania property. On 4 November 2014, the Defendants received the net proceeds of sale of that property ($1,019,167). On 13 November 2014, they received the net proceeds of sale of the personal effects and contents ($450). On 24 November 2014, they received the proceeds of the bank accounts ($1,074,056).

24. The total of the amounts received was $2,093,673 and it has been invested in an interest bearing account controlled by the partners of the Defendants’ solicitors, at various interest rates, calculated at between 0.7% and 2.5% per annum. (In the Defendants’ submissions, the amount said to have been collected was $2,101,663. The difference of $7,990 was not explained.)

25. Debts, funeral and testamentary expenses were paid, including the deceased’s electricity account, accountancy fees, taxation, legal expenses and executors’ commission. In a diary note, dated 9 September 2014, the Defendants are noted to have informed their solicitor that they “will apply for commission”: Exhibit P4.

26. In June 2018, the Defendants applied for, and were allowed, such commission or percentage for their “pains and trouble” as was just and reasonable pursuant to s 86 of the Probate and Administration Act 1898 (NSW).

27. On or about 7 November 2014, the estate’s solicitors received a letter with a declaration attached, from Stanislaw, in relation to his entitlement in the deceased’s estate.

28. On 14 November 2014, the executrix, June Salvio, made an interim distribution of the deceased’s personalty to Stanislaw. The items were shipped to the office of his Polish lawyer, Marek Eilmes.

29. Stanislaw Habel survived the deceased by more than 30 days (as is relevant for the purposes of s 35 of the Succession Act 2006 (NSW)).

30. On or about 21 November 2014, Mr James Soothill contacted the estate solicitor to advise that Stanislaw had died on 19 November 2014.

31. By 28 November 2014, the Defendants’ solicitors had retained accountants “to attend to the finalisation of [the deceased’s] taxation obligations”: see Exhibit P4.

32. On 9 December 2014, the solicitors for the executors wrote to the insurers of the deceased’s real estate confirming that the real estate had been sold with completion of the sale having occurred on 3 November 2014: Exhibit P4.

33. By letter dated 22 March 2016, the solicitors for the executors informed Mr Eilmes that “[o]ur clients are applying to the Supreme Court of New South Wales to pass their accounts and to allow commission or payment for their efforts in administering the estate …”: Exhibit P4.

34. The Notice of Assessment of income tax of the estate, for the financial year ended 30 June 2015, was issued on 11 March 2019: Exhibit P4.

35. The Court was informed, without objection, that the current amounts held on behalf of the estate of the deceased were $2,110,382 and $26,571, making a total of $2,136,953: Tcpt, 13 February 2020, p 10(19–31).

The Circumstances Surrounding the Deceased’s Will

36. The deceased’s Will was drafted by Mr Lou Polito, who was also one of the attesting witnesses to the deceased’s signature on that Will. The other attesting witness was said to be Jessica Davis, described in the Will as “Secretary”.

37. Mr Polito did not depose an affidavit that was read by either party at the hearing. However, what appeared to be, the complete contents of the Will file relating to the Will of the deceased, were put into evidence: Exhibit D5.

38. In the documents tendered, were two relevant diary notes, one handwritten (presumably of Mr Polito) dated 16 January 2013 and one typewritten dated 17 January 2013. I set out the terms of each:

Handwritten note dated 16 January 2013

“Meeting with Julia Johnson at her home.

Executor

ADRIANA DOLSON

CAROLINE JUNE SALVIO

Give $1,000 each.

Residue

To Brother STANISLAW HABEL

if predeceases to his children equally.

They 2 in Canada

One child in Poland

Not leaving anything to Henry K who was sister’s son.

Do not wish to be cremated.

Buried as per codicil.”

Typewritten note dated 17 January 2013

“FILE NOTE 17 January 2013

Attended Julia Johnson at her home together with Jessica as a witness. I had seen Julia the day before to obtain instructions in relation to a new Will. The Will was relatively straightforward she wanted to appoint two of her friends, Adriana and Caroline as Executors and leaving $1,000 to each of them, then the residue to her brother in Poland. This was a little bit different from her previous Will where she had also included a nephew in Poland.

I went through the document with her, read it to her and she approved its contents, and then it was signed. There was no issue in respect of capacity, Julia was very talkative and alert and new [sic] exactly what she wanted to do. The previous day I had spent more than an hour with her where she told me virtually her life story from the time that she was born in Poland and the German invaded Poland and she was taken as a prisoner of war to moving to Australia, her first marriage and then her second marriage and she was able to recount dates of birth, dates of marriages and other relevant facts.

On the day that we attended for her to sign the Will, again she was very talkative and new [sic] exactly what was in the Will and what she wanted to do, she was able to again recall specific dates, she was able to recall our office phone number by memory and again kept us talking for over half an hour.

She wanted to retain the original Will as she wanted to put it with the Commonwealth bank at Sutherland with her deeds to her house, she said that she would get Adriana to attend to that. She then also requested that the old Wills be destroyed, I told her that I was unable to destroy them, she said that if I could leave them with her and she will attend to it. All previous Wills were then left with her in accordance with her specific instructions.”

The Submissions on the Construction of the deceased’s Will

39. As stated, the only aspect for determination is the meaning of the term in the deceased’s Will “before attaining a vested interest”.

40. Counsel for the Plaintiff relied on authorities that support the proposition that a Will should be construed in such a way that effect is given to every word in it: see, for example, Re Croxon; Croxon v Ferrers [1904] 1 Ch 252 at 257–258 (Kekewich J); Re Evans; Public Trustee v Evans [1920] 2 Ch 304 at 309 (Russell J), 317 (Lord Sterndale MR).

41. Counsel seemed to accept, however, that the principle must yield to the fundamental principle that it is the duty of the Court to ascertain the deceased’s intention, and that words ought ordinarily to be given their ordinary meaning.

42. Counsel then referred to a number of cases which stated that, when used, the term “vested interest” meant “vested in possession”. He relied, in particular, on Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; [1965] AC 694; and Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45.

43. He also relied upon a passage in Theobald on Wills (17th ed, 2010, Thomson Reuters) (at [18]):

“If, however, the gift over be to persons living at the time of distribution, there is strong argument that the word ‘vested’ was used as equivalent to vested in possession. So, if the legacies would be vested in interest at the testator’s death, and the gift over is, if any of the legatees die during the testator’s life or after his decease without attaining vested interests, vested must mean vested in possession. And, in the same way, the testator may show that he used ‘vested’ in the gift over as equivalent to ‘paid’ if the gift over is, if any die before their share should be vested as aforesaid, when only directions as to payments have been previously given. If the testator expressly provides for the death of the legatees in his lifetime, a gift over upon death before vesting refers to vesting in possession.”

44. Counsel also relied upon the decision of Rein J in Application by Elizabeth Marie Robinson [2015] NSWSC 1387, where his Honour had construed a Will which was in part, in the same terms. I shall return to this decision in more detail later in these reasons.

45. Counsel then submitted:

“The phrase used by Juliana Johnson concerns itself with the possibilities of death of her brother, Stanislaus then aged 88:

a)   Prior to the date of her will

b)   Prior to the date of her death

c)   Prior to the date on which he attains a vested interest.

She must have meant the words to have a purpose, other than a requirement for Stanislaus to survive, because (a) and (b) deal with that eventuality.

(vi) In further support, and as a matter of general principle:

The Court does not as a rule import to the testator that he uses additional words, without some additional purpose or without any purpose at all.

(Williams on Wills, 9th ed. [2008] (at 50.16) and approved in Austin v Wells [2008] NSWSC 1266 per White J.”

46. Counsel submitted that the words “dies before attaining a vested interest” required that the deceased’s estate must have been administered to the point where the executors were ready to distribute it, to Stanislaw, at the date of his death. Since that was not possible on 18 November 2014:

“[t]here was nothing incongruous in the deceased wishing to bestow upon her niece, a benefit that was intended to go to her brother, if by the time the estate was ready to be distributed, her brother had died. The practical consequences of that provision was that the benefit could go directly and immediately to Halina …”.

47. Counsel for the Defendants acknowledged that the decision of Rein J in Application by Elizabeth Marie Robinson:

“could have the effect contended [for] by the plaintiff, subject to the clarification by the Court of certain estate administration questions which arise from:

a.    the interplay of the sections of the Succession Act 2006; and

b.   the specific events which occurred in the estate administration of the deceased's estate.”

48. Counsel accepted that no contrary intention to s 35(1) of the Succession Act appeared in the deceased’s Will.

49. Counsel referred also to s 93 of the Succession Act which relates to the protection given to a legal personal representative upon the publication of notice of intention to distribute the estate, such distribution not to take effect until six months after the date of death, and submitted that “[t]he interplay of these sections prevented the defendants - as executrices who were not able to exclude the possibility of a claimant for provision even though the estate could be distributed within the six month period - from making a final distribution to Stanislaw Habel before he died” and that “has an enduring effect on the administration of estates in general, and has the potential to cause or contribute to the entitlement problem which has arisen in this estate”.

The General Principles

50. The determination of this matter requires consideration of the principles, to some of which reference was made in the submissions of each of the parties, relating to the construction of wills.

51. In relation to the construction of a testamentary document, the object of a will construction suit is to ascertain the intention of the deceased as expressed in her, or his, Will, or codicil, when it is read as a whole. The intention of the maker of the testamentary instrument has been referred to as the “pole star” in the construction of wills: Thomson v Thomson [2008] VSC 375 at [11] (Vickery J).

52. As was observed by McMillan J in Re De Bruyn [2016] VSC 6 at [17]: “[t]he Court’s role is not to give a more rational meaning to the deceased’s [W]ill but merely to determine the intention as stated, or interpret what has been expressed in the [W]ill. In interpreting words in the context of the [W]ill as a whole, the Court may ignore, change or read in words by necessary implication”.

53. This was clearly expressed in Towns v Wentworth [1858] EngR 371; (1858) 11 Moo PC 526 at 543:

“When the main purpose and intention of the Testator are ascertained to the satisfaction of the Court, if particular expressions are found in the Will which are inconsistent with such intention, though not sufficient to control it, or which indicate an intention which the law will not permit to take effect, such expressions may be discarded or modified; and, on the other hand, if the Will shows that the Testator must necessarily have intended an interest to be given which there are no words in the Will expressly to devise, the Court is to supply the defect by implication, and thus to mould the language of the Testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the Testator has on the whole Will, sufficiently declared.”

54. Campbell JA, in Byrne v Macquarie Group Services Australia Pty Ltd [2011] NSWCA 68, wrote at [2], in another context, that “construction is a process of coming to understand the meaning of a text whose meaning is disputed. It involves a consideration of the disputed text in itself, both as a whole, and in its constituent parts.”

55. In Marley v Rawlings [2015] AC 129; [2014] UKSC 2, a decision of the Supreme Court of the United Kingdom, which involved the rectification of wills, Lord Neuberger (with whom Lord Clarke, Lord Sumption and Lord Carnwath agreed), wrote, at [20], that “the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context ...”. His Lordship also observed (at [23]) that this guidance is consistent with the historic principle that a will is to be construed from the testator’s armchair in the light of her, or his, surrounding circumstances at the time.

56. What has been described as the ten ‘incontestable principles’ for the construction of wills described by Isaacs J in Fell v Fell (1922) 31 CLR 268; [1922] HCA 55, at 273–275 should be remembered:

“(1) ‘Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence, as is necessary in order to enable us to understand the words which the testator has used’ …

(2) ‘The instrument ... must receive a construction according to the plain meaning of the words and sentences therein contained’. But … you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it …

(3) ‘If the will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the Court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has, on the whole will, sufficiently declared’ …

(4) An inference cannot be made ‘that did not necessarily result from all the will taken together’ … A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed …

(5) ‘[The court] cannot give effect to any intention which is not expressed or plainly implied in the language of’ the ‘will’ … ‘You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication’ …

(6) ‘If the contents of a will show that a word has been undesignedly omitted, or undesignedly inserted, and demonstrate what addition by construction or what rejection by construction will fulfil the intention with which the document was written, the addition or rejection will by construction be made’ …

(7) ‘When the will is in itself incapable of bearing any meaning unless some words are supplied, so that the only choice is between an intestacy and supplying some words; but even there, as in every case, the Court can only supply words if it sees on the face of the will itself clearly and precisely what are the omitted words, which may then be supplied upon what is called a necessary implication from the terms of the will, and in order to prevent an intestacy’ …

(8) ‘There are two modes of reading an instrument: where the one destroys and the other preserves, it is the rule of law, and of equity, following the law in this respect (for it is a rule of common sense…), that you should rather lean towards that construction which preserves, than towards that which destroys’ …’

(9) If on reading the will you can see some mistake must have happened, ‘that is a legitimate ground in construing an instrument, because that is a reason derived not dehors the instrument, but one for which you have not to travel from the four corners of the instrument itself’ …

(10) ‘The mind never inclines towards intestacy: that is a dernier resort in the construction of wills’ …” (footnotes omitted)

57. In Pohlner v Pfeiffer (1964) 112 CLR 52 at 77; [1964] HCA 8, the High Court considered whether the testatrix in her Will had evinced a contrary intention to a particular rule of construction. Windeyer J stated that he thought that the correct view was that:

“… whether or not a contrary intention appears depends upon the meaning of the will construed according to ordinary principles of construction, and in the light of any extrinsic evidence properly admissible of facts, known to the testator, that existed at the time he made his will.”

58. In Coorey v Coorey (Supreme Court (NSW), Powell J, 22 February 1986, unrep), Powell J (as his Honour then was) said, in a passage approved by Bryson J (as his Honour then was) in Perpetual Trustee Co Ltd v Wright; Re Will of James Paul Gee Cox Junior, Deceased (1987) 9 NSWLR 18 at 32–33, repeated again by Hamilton J in Hatzantonis v Lawrence [2003] NSWSC 914 at [10], by Gzell J in Peoples v Simpson [2005] NSWSC 355 at [6], and by Campbell JA in Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 at [19]:

“... It seems to me that one’s task is, first, if it be possible, to ascertain what was the basic scheme which the deceased had conceived for dealing with his estate and then, so to construe the will as, if it be possible, to give effect of the scheme so revealed.”

59. In Muir v Winn [2009] NSWSC 857, Bryson AJ added at [24]:

“It is necessary to seek to understand the scheme of a testator’s dispositions. Where the terms of the will are perfectly clear search for the scheme may be of little use, but where the language is obscure or the effects of the literal reading and the reasoning impliedly underlying it are startlingly unlikely, as in this case, the scheme of dispositions is very important …”

60. In relation to the term “vested”, Campbell JA in Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 wrote at [35]–[37]:

“There has been elaborate debate about whether the gift that they were given by cl 5(a)(i) was ‘vested’, and if so when. But the term ‘vested’ itself is in need of explanation. Its origin was as a Latin-derived metaphor meaning, ‘clothed’. While it has come to be used in a context of technical legal language, it has not shed the inherent imprecision of metaphor to such an extent that it has precisely the same connotation in all legal contexts.

There are some gifts that confer vested rights from the moment of creation, that never cease to be vested – but concerning them there is seldom occasion for any debate or discussion about their being vested. More usually, there is an implicit temporal reference in saying that the subject matter of a particular gift is ‘vested’ – just as clothes can be put on and off, so being ‘vested’ is a quality that the subject matter of a gift can lack at one time but then gain. Conversely, there is a legitimate sense in which the subject matter of a gift can be ‘vested’ at a particular time, even if later events might cause the gift not to take effect or to be cut down in quantum. A gift can be ‘vested’ in either of these senses if at the time that is being spoken about, a particular person has an identifiable right of property concerning the subject matter of the gift.

Further, just as there is some clothing that one wears in layers, so that it is possible to be clothed with one layer of the clothing at a time when another layer remains to be added, so sometimes a gift of an item is one that involves a gift of several different rights or potentials to acquire rights concerning that item. Concerning such gifts it is possible for a donee to have (and in that sense be vested with) a particular right at one time, even though it is only later or if some event happens (and maybe never) that the donee will have, or be vested with, some different right concerning the gift. If the gift in question is of that type, an incomplete analysis of the situation might result if one enquired whether at some particular time or times the gift is vested, and tried to answer that enquiry with a simple “yes” or “no”. What is needed in that situation is precision about the precise rights concerning that gift that the donee has from time to time.”

61. In Arnott v Kiss [2014] NSWSC 1385, I wrote at [41]–[43]:

“However, unless there is, in the will, an express intention to suspend, or postpone, vesting, a gift to persons already in existence is construed to vest immediately on the testator's death. In Duffield v Duffield (1829) 3 Bligh (NS) 260; 4 ER 1334, Lord Eldon wrote:

‘The rights of the different members of families not being ascertained whilst estates remain contingent, such families continue in an unsettled state, which is often productive of inconvenience, and sometimes of injury to them. If the parents attaining a certain age be a condition precedent to the vesting estates by the death of their parents, before they are of that age, children lose estates which were intended for them, and which their relation to the testators may give them the strongest claim to.

In consideration of these circumstances, the judges from the earliest times were always inclined to decide that estates devised were vested; and it has long been an established rule for the guidance of the Courts of Westminster in construing devises, that all estates are to be holden to be vested, except estates, in the devise of which a condition precedent to the vesting is so clearly expressed, that the Courts cannot treat them as vested, without deciding in direct opposition to the terms of the will. If there be the least doubt, advantage is to be taken of the circumstance occasioning that doubt; and what seems to make a condition, is holden to have only the effect of postponing the right of possession.’

In other words, where there is a doubt about the time when a gift shall vest, there is a presumption that the testator intended the gift to be vested, subject to being divested, rather than it remain in suspense: Hickling v Fair [1899] AC 15, at 27. This is said to be a presumption in favour of early vesting.

The rules of construction, to which I have referred, must give way to a plain indication in the will as to the deceased's intention. Such a contrary intention may be found, in a will, for example, by the deceased referring to the possibility of the beneficiaries dying ‘before attaining a vested interest’, or the trusts of a share, or shares, failing, because ‘no person attains a vested interest in that share’.”

62. In HS Theobald, SM Cretney and G Dworkin, Theobald on Wills (13th ed, 1971, Stephen & Sons) the following passage appears at [430]:

“[t]he court has not only to construe the will as a piece of English, it has also to apply it to the existing facts. It has to ascertain who the objects of the testator’s bounty are, and in the case of specific gifts, what the subject matter of these gifts is. For this purpose the important distinction must be borne in mind between evidence of the testator’s intention – for instance, declarations by him as to what he meant – and evidence of surrounding circumstances from which his intention may be inferred. The former evidence is hardly ever, the latter is in most cases, admissible.”

63. In Jepson v Bowman [2014] VSC 590, McMillan J wrote at [79]:

“[t]he general rule is that a testator’s declarations as to his or her intentions and the meanings of words used in the testamentary document are inadmissible as direct evidence of testamentary intentions. This means that in most circumstances evidence of instructions of a testator to his or her solicitor would be inadmissible in construing the meaning of a will: Re De Bruyn [2016] VSC 6 at [15].”

64. From all of the above, it is clear that the search is for the deceased’s “expressed intentions, not what she meant to say, but what she actually said”: Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111 at [32] (Stanley J), citing Perrin v Morgan [1943] AC 399 at 406.

65. Of course, in New South Wales, in relation to the estate of a person who dies after 1 March 2008, it is necessary to consider the Succession Act 2006 (NSW), which, so far as is relevant, by s 32, provides:

32    Use of extrinsic evidence to construe wills

(1)    In proceedings to construe a will, evidence (including evidence of the testator’s intention) is admissible to assist in the interpretation of the language used in the will if the language makes the will or any part of the will:

(a)    meaningless, or

(b)    ambiguous on the face of the will, or

(c)    ambiguous in the light of the surrounding circumstances.

(2)    Despite subsection (1), evidence of the testator’s intention is not admissible to establish any of the circumstances mentioned in subsection (1) (c).

(3)    Despite subsection (2), nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.

66. The language is ambiguous if it can reasonably be interpreted in more than one way, or the words used can reasonably be given more than one meaning. The ambiguity may be apparent on the face of the will itself or when construed in the light of the surrounding circumstances. The section permits the Court to have regard to extrinsic material in construing a will. Extrinsic evidence can also be admitted under the section to assist in the interpretation. It is not open to the Court, even in the light of such evidence, to interpret the will in a way that is inconsistent with the words used.

67. In James v Douglas [2016] NSWCA 178, Meagher JA (with whom Leeming and Simpson JJA agreed) wrote, at [19]:

“At common law, evidence of what a testator intended in relation to the operation of a testamentary document was not admissible: Sherratt v Mountford (1873) LR 8 Ch App 928; Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60 at 64. However, evidence of facts and circumstances known to the testator at the time the will was created could be taken into account in interpreting its language: King v Perpetual Trustee Co (Ltd) [1955] HCA 70; 94 CLR 70 at 78. That position was modified by s 32 of the Succession Act, and its predecessors in other jurisdictions: see Administration of Justice Act 1982 (UK), s 21; Wills Act 1968 (ACT), s 12B; Morgan v Moore [2000] VSC 94 at [19]–[32].”

68. In Application by Elizabeth Marie Robinson, Rein J was asked to consider a bequest, and the gift of residue in a Will which provided:

“(3) “(a) $500,000 to my son KONRAD HASKINS (“Konrad”).

If KONRAD HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his daughter AMELIA HASKINS who survives me, then AMELIA HASKINS upon attaining the age of 25 years takes such legacy which my said son would otherwise have taken.

[…]

(v) I give the residue of my estate to:

(i) the ‘Sam and Alida Haskins Study Grant’ as to 10% of the residue of my estate (this being in addition to any other legacy to the ‘Sam and Alida Haskins Study Grant’ under this my will);

(ii) Konrad as to 55% of the residue of my estate; and

(iii) Ludwig as to 35% of the residue of my estate.

If KONRAD HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his daughter AMELIA HASKINS who survives me, then AMELIA HASKINS upon attaining the age of 25 years takes such legacy which my said son would otherwise have taken.

If LUDWIG HASKINS has already died or does not survive me or dies before attaining a vested interest, leaving his son OREN HASKINS who survives me, then OREN HASKINS takes such legacy which Ludwig would otherwise have taken.”

69. At [6], Rein J noted that “[t]he critical question is what is the meaning of the phrase ‘dies before attaining a vested interest’”. His Honour then referred to authorities in favour of the word “vest” meaning “vested in interest” and others that were in favour of the word meaning “vested in possession”.

70. His Honour then wrote at [28]–[32]:

“The interpretation which was advanced on behalf of Sandy renders the words ‘dies before attaining a vested interest’ as superfluous - since if they had been omitted Konrad would have obtained an unqualified interest. The words incorporated have a meaning and are not contrary to some intention plainly expressed elsewhere in the will and in my view require that the estate must have been administered to the point that the executors are ready (or ought to be ready) to distribute the relevant amount to Konrad. That was not possible before the time that Konrad died.

In respect of Mr Hill’s argument set out at [10](3) above, if an executor or administrator were to delay administration of the estate in order to avoid a distribution because he or she believed that the named beneficiary might expire before the date of distribution and hoped thereby to benefit the recipient of the interest who would take in such circumstances that would entail a dereliction of duty and could expose the executor to civil claims by the estate of the person who would have benefited had the estate been properly administered. I do not think the possibility of aberrant conduct of an executor can govern the meaning of the phrase.

There is, in the present case, no risk of partial intestacy because there is a gift over to Amelia. Nor is there any incongruity as would have been created by the will under consideration in Marks. This is not a case in which the words used involve a contingency such as ‘if X attains the age of 30’ or ‘if X has lawful issue’. Rather it is the words ‘if Konrad dies before he attains a vested interest’ that create the contingency.

There is nothing incongruous in a testatrix wishing to bestow upon her granddaughter a bequest that was intended to go to her son if by the time the estate is ready to be distributed the son has died. The practical consequences of that provision, so interpreted, is that the gift or legacy can go directly and immediately to the granddaughter without her having to await the administration of her father’s estate. The provisions of the PAA coupled with explanation of the true interest of a beneficiary assist in the conclusion that the testatrix understood that the interest which she intended to give to Konrad might not vest before his death even if he survived her.

I do not think that there is any scope for the operation of a presumption here because I am of the view the words ‘dies before attaining a vested interest’ in the context of this will evince an intention that the bequests were not to take effect on the death of the testatrix. This is supported by the passage in ‘Theobold’ and the cases there cited to which I have referred in [14] particularly King v Cullen where at p 114 the Vice Chancellor said by the word “vested” in the phrase ‘before the part or share, so bequeathed to them as aforesaid, shall become a vested interest’:

‘Something beyond surviving the testator is therefore intended.’

If the provision had been to Konrad ‘if he shall survive me’ then on the death of the testatrix, Konrad would be regarded as having a vested interest of which his estate would not be deprived on his death. The addition of the words ‘dies before attaining a vested interest’ indicate that merely by surviving the testatrix he would not be treated as having a vested interest and that more was required, and recognise that, in accordance with Australian law a beneficiary does not have any interest in any particular asset or fund or money until the estate has been administered and the executors are ready to distribute.”

71. Apparently, there was no reference made by counsel in Application by Elizabeth Marie Robinson, to s 93 of the Succession Act and his Honour did not refer to it. That section is in the following terms:

“93    Protection of legal representative who distributes after giving notice

(1)    The legal representative of the estate of a deceased person may distribute the property in the estate if:

(a)    the property is distributed at least 6 months after the deceased person's death, and

(b) the legal representative has given notice in the form approved under section 17 of the Civil Procedure Act 2005 that the legal representative intends to distribute the property in the estate after the expiration of a specified time, and

(c)    the time specified in the notice is not less than 30 days after the notice is given, and

(d)    the time specified in the notice has expired, and

(e)    at the time of distribution, the legal representative does not have notice of any application or intended application for a family provision order affecting the estate of the deceased person.

(2)    A legal representative who distributes property of the estate of a deceased person is not liable in respect of that distribution to any person who was an applicant for a family provision order affecting the estate if the legal representative did not have notice at the time of the distribution of the application and if:

(a)    the distribution was made in accordance with this section, and

(b)    the distribution was properly made by the legal representative.

(3)    For the purposes of this section, notice to the legal representative of an application or intention to make any application under this Chapter must be in writing signed in accordance with rules for the signing of documents by a party in proceedings under the Uniform Civil Procedure Rules 2005.”

72. It is necessary to bear in mind what was written in Tanner v New Zealand Guardian Trust Co Ltd [1992] 3 NZLR 74 (CA) at 77 the Court of Appeal stated:

“It is appropriate to consider, as did the Judge, the principles which the courts have applied in interpreting similar gifts by will. As the Judge said, the draftsman and the testator should be presumed to have such interpretations in mind when the form of the will was prepared and executed. Draftsmen should be able to rely on consistency of construction by the courts so that similar words will produce similar results unless the context requires otherwise.”

Determination

73. As Cairns J said in In the Estate of Muirhead, Deceased [1971] P 263 at 265:

“I approach the matter with the conviction that it is the duty of a Court of Probate to give effect, if it can, to the wishes of the testator as expressed in testamentary documents.”

74. In this case, there are a number of aspects that I consider are of importance in determining the meaning of the deceased’s Will. These are:

1. There was no intermediate gift of the estate, either capital or income, before the gift to Stanislaw; the gift in Cl 3(c) was a gift of the rest and residue. The substitutionary gift appears to have provided for the destination of the rest and residue in certain events and to prevent the gift of the rest and residue lapsing.

2. There was no provision in the deceased’s Will making the vesting of Stanislaw’s interest contingent on the happening of any prescribed event other than the three events to which reference has been made.

3. The intention of the deceased, as appears from the Will, was that she wished to give a small pecuniary legacy to each of the Defendants; and then, her primary intention was to provide for the whole of her residuary estate to pass to Stanislaw, but in certain events, for her estate to pass to the Plaintiff.

4. If all of the interest in residue was intended to vest on the date of the deceased’s death, the relevant clause could have ended at “does not survive me”. There would have been no need to go on to cover the situation of the residuary beneficiary dying “before attaining a vested interest”. However, “does not survive me” was followed by an “or”, thereby denoting that a situation of the residuary beneficiary already having died, or pre-deceasing the deceased, as well as the situation of him dying before attaining a vested interest, were perceived as three distinct, and separate, situations, which would result in the gift of residue passing to the Plaintiff.

5. There was nothing in the Will to indicate that the deceased intended to give any part of her estate to the beneficiaries of Stanislaw’s estate. For example, had the deceased intended that Stanislaw’s other children should receive any part of her estate they could have been included, with the Plaintiff, as substitute beneficiaries.

6. The deceased died on 27 June 2014. The six month period after which an estate may be distributed, as provided for in s 93, had not expired on 18 November 2014, the date of Stanislaw’s death. It follows that if the estate had been distributed before 27 December 2014, the Defendants, as executors, would not have been entitled to the protection accorded to them by s 93, had they otherwise complied with the requirements of the section.

7. There was no dispute that the estate was not capable of being distributed before 18 November 2014, the date of Stanislaw’s death. It was still in the administration phase and the Defendants, at that time, held the estate as executors not as trustees.

75. It seems to me that there are three possible meanings of the words “dies before attaining a vested interest” in Cl 3(c) of the deceased’s Will, namely: (a) that they are tautologous and mean the same as “if [he] dies before does not survive me”; (b) that they mean “vested in possession” and that means the time when Stanislaw would take the estate beneficially; or (c) that they mean “before the estate is fully administered and available to be distributed”: see De Martin v Jacobs [2008] NSWSC 1378 at [13] (Young CJ in Eq).

76. Counsel characterised the question as being whether the phrase means “vested in interest” or “vested in possession”. However, I am of the view that the three alternatives better express what needs to be determined.

77. In the present case, the Court must place reliance on “the testator’s intentions as deduced from the will as a whole”. The Court should ascertain what the basic scheme that the deceased had conceived for dealing with her estate was, and then construe her Will, if it be possible, to give effect to the scheme so revealed.

78. The deceased was concerned with the order of succession. She intended to make provision for three eventualities, including that Stanislaw died before attaining a vested interest in the residuary estate. In that circumstance, she intended the Plaintiff, only, to receive her residuary estate.

79. Considering all of the matters to which I have referred, the deceased intended that the term “dies before attaining a vested interest” in Cl 3(c) of the deceased’s Will meant dies “before the estate is fully administered and available to be distributed” to him. The addition of the words referred to indicate that merely by surviving the deceased, Stanislaw would not be treated as having a vested interest and that more was required. To construe the Will otherwise would give no work to the expression referred to.

80. There is another way of looking at the matter. At the outset, it is useful to repeat what was stated by Professor Hayton in “Uncertainty of Subject-Matter of Trusts” (1994) 110 LQR 335. At 338, he wrote:

“It is elementary that a bequest is a perfect gift that is completed by the testator’s death. Thereupon, certain property, namely the testator’s whole estate, passes to the executor, who has full ownership without distinction between legal and equitable interests therein, subject to fiduciary obligations to administer it by paying debts, expenses, taxes, etc, and then implementing the executory trusts of the testator to the extent that there is sufficient property left to satisfy such trusts. The intended beneficiaries only have an equitable chose in action until the executor has completed the administration of the estate: Commissioner for Stamp Duties v Livingston [1965] AC 694.”

81. In White v Shortall (2006) 68 NSWLR 650; [2006] NSWSC 1379 at [170], Campbell J (as his Honour then was) described that analysis of the position of the beneficiary in an unadministered estate as “impeccable”.

82. Equity does not recognise or create, for residuary legatees, a beneficial interest in the assets in the executors’ hands during the course of the administration. Hence, a residuary beneficiary has no equitable interest in the assets of a deceased estate, other than the interest to ensure due administration which, it might be said, annexes to those assets, until such time as the executor assents to the holding of the residuary estate upon trust for the residuary beneficiary. The only right which the residuary beneficiary may exercise is that to compel the due administration of the deceased estate by the executor. The trust created is to preserve the assets, to deal properly with them, and to apply them, in the due course of administration, for the benefit of those interested according to that course.

83. An assent is the legal method by which the executor indicates that he, she or it, does not require particular property of a deceased person for the discharge of the liabilities of the estate, and that the property may pass to the beneficiary: “[i]t is an act by which an executor indicates that an asset is to vest in a beneficiary. It means that the executor no longer requires property of the deceased to pay debts, funeral expenses, or general pecuniary legacies of the testator. Whether or not an executor has assented is a question of fact”: Simmons v Ross [2018] VSC 306 at [77] (Derham AsJ).

84. Approaching the matter in this way, the fact that the Defendants distributed the deceased’s personalty to Stanislaw before his death meant only that they no longer required the personalty to pay debts, funeral and testamentary expenses, or the two pecuniary legacies. At the date of Stanislaw’s death, there was no trust fund consisting of the deceased’s residuary estate in which Stanislaw could be said to have any beneficial interest. Other than in respect of the personalty, there had been no assent by the Defendants. Indeed, at the date of Stanislaw’s death, they were not in any position to assent as they had not, by then, paid all of the debts, funeral and testamentary expenses of the estate.

85. It follows that Stanislaw had not attained a vested interest at the date of his death in the deceased’s residuary estate and that the Plaintiff is now entitled to the whole of the deceased’s residuary estate, as other than the costs of these proceedings, the administration of the deceased’s estate is complete.

Costs

86. Any issue about costs disappeared as there was really no dispute that the Defendants were entitled to their costs, calculated on the indemnity basis, of the proceedings. There is no need to make an order for costs in the Plaintiff’s favour as she inherits the whole of the deceased’s estate.

87. In the circumstances, the Court:

1. Declares that Stanislaw Habel died before attaining a vested interest in the rest and residue of the deceased’s estate in accordance with Cl 3(c) of the deceased’s Will.

2. Declares that the whole of the rest and residue of the deceased’s estate passes to the Plaintiff, Halina Serwin.

3. Orders that the whole of the Statement of Cross-Claim filed 23 July 2019 be dismissed.

4. Orders that the Defendants’ costs, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate of the deceased.

**********

Decision last updated: 08 April 2020