SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY Case Title: In the estate of Pryor Citation:
[2023] ACTSC 170
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | In the estate of Pryor |
Citation: | [2023] ACTSC 170 |
Hearing Date: | 28 March 2023 |
DecisionDate: | 7 July 2023 |
Before: | McWilliam J |
Decision: | (1) The application is dismissed. (2) The costs of the proceedings are to be paid out of the Estate of the late Bruce Pryor. |
Catchwords: | SUCCESSION – EXECUTORS AND ADMINISTRATORS – Equitable ademption – whether gift given shortly before death adeemed legacy in will – whether testator intended later gift to be in substitution for legacy – where gift given through company owned by testator – where purpose of gift and legacy not identical – where surrounding circumstances indicated no intention by testator that the donation inter vivos bring about an ademption of the legacy under the will – no ademption |
Legislation Cited: | Court Procedures Rules 2006 (ACT) r 1732 Trustee Act 1925 (ACT) ss 59(4), 63(1) Wills Act 1968 (ACT) ss 11A, 12A, 21 |
Cases Cited: | Bates v Messner (1967) 67 SR (NSW) 187 Brown v Heffer (1967) 116 CLR 344 Seaborn v Marsden (1926) 26 SR (NSW) 485 |
Texts Cited: | J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) |
Parties: | Mark Alexander Phillips (as executor of the estate) (Plaintiff) Wesley College Sydney University (Defendant) |
Representation: | Counsel B Gillies (Plaintiff) G McGrath (Respondent) |
| Solicitors Symons Phillips Lawyers (Plaintiff) Prichard Lawyers (Defendant) | |
File Number: | PRO 922 of 2017 |
McWILLIAM J:
Sometime between 19 and 20 July 2017 and having been married to each other for fifty-three years, two quiet and generous Canberrans named Bruce Pryor and Jeanette Pryor died, leaving substantial assets and no children. They had each executed mirror wills on 28 June 2017 (the Wills) which, relevantly to the present proceeding, divided the residue of their estates (hereafter simply “the Estate”) among three institutions as follows:
(a)50 percent to the Australian National University (ANU) for medical research;
(b)25 percent to Mr Pryor’s former Sydney University Hockey Club at the University of Sydney (through Sydney University Sport) (Hockey Club); and
(c)25 percent to the respondent, Wesley College Sydney University (Wesley College), where Mr Pryor had resided while studying architecture and later became the architect for a new residential wing there.
A dispute has arisen about the residue of the Estate insofar as it relates to Wesley College. On 17 July 2017, shortly before Mr and Mrs Pryor died, a company called Brujen Pty Ltd (Brujen) made a donation to Wesley College. The donation was in the form of a cheque signed by each of Mr and Mrs Pryor for the amount of $2 million (17 July donation), which was received and presented on 19 July 2020. Brujen was controlled by Mr and Mrs Pryor (the company name being an amalgam of their first names). They were its sole directors and ultimate shareholders, through a structure involving another company, which is set out in more detail below.
The issue in this proceeding is whether the 17 July donation, which was made after the execution of the Wills but before Mr and Mrs Pryor died, adeemed the legacy left to Wesley College (to the extent of the value of the donation).
The application for determination
By application filed 27 September 2022, the executor of the Estate, Mr Mark Phillips (Executor) seeks a declaration about the legal consequences of the 17 July donation for the testamentary gift to Wesley College, namely that the donation to Wesley College constitutes a partial ademption of the testamentary gift. Because of the mirror will provisions, the application was brought only in the estate of the late Mr Pryor.
The proceedings have arisen through what was historically the probate jurisdiction, with the Executor seeking to properly administer the estate having regard to any duly expressed testamentary intentions of the deceased, and the respective interests of parties beneficially entitled to the estate: Reilly v Reilly [2017] NSWSC 1419 at [70]. It is worth recording that the overarching objective of the Court in an exercise of probate jurisdiction is to carry out the deceased’s testamentary intentions, and to see that beneficiaries get what is due to them: In the Goods of William Loveday [1900] P. 154 at 156; Bates v Messner (1967) 67 SR (NSW) 187 at 189 and 191-192; Estate Kouvakis [2014] NSWSC 786 at [211]; Parsons v Davison [2016] NSWSC 1491 at [8]-[9].
The relief sought involves an intersection with equity as discussed further below. A declaration in the terms sought by the Executor would mean that the $2 million donation (or gift inter vivos) to Wesley College is treated as Wesley College receiving part of its share of the residue in advance, so that its entitlement in the residue would be reduced by $2 million. The word “ademption” derives from the Latin “ademptio”, which means “a taking away”: Reynolds v Bonnici [2017] NSWSC 828 (Reynolds) at [38] per Lindsay J.
Wesley College opposed the application.
For the reasons that follow, no ademption arises in the present case.
Notice to other interested entities
Affidavit evidence from the Executor deposed to the other beneficiaries of the residue being on notice of these proceedings. They are the ANU and Sydney University Sport, who are not parties to the dispute. They have declined to take an active part.
The Wills
There is no issue about the validity of the Wills. Mr and Mrs Pryor appointed each other as their executors and left their estates to each other if either husband or wife survived the other for thirty days. That did not occur.
There were alternative provisions in the Wills, which appointed their solicitor Mr Mark Phillips as their executor, made a number of specific bequests or legacies to their family members (which have been distributed according to those terms) and then divided the residue among the three institutions mentioned above.
The relevant term of the Wills provided that the residue be divided for the following purposes (in summary):
(a)50 percent to the ANU, to be used to support the Centre of Personalised Immunology for research into dermatomyositis and/or related diseases;
(b)25 percent to Sydney University Sport, “for infrastructure and capital works improvements that provide, enhance and maintain home grounds and facilities for the Sydney University Hockey Club”; and
(c)25 percent to Wesley College, in the following terms (hereafter, the “Legacy”):
(i)It is my specific wish that this gift be applied toward the following under the direction of an independent firm of Architects experienced with the design and cost control of such projects:
A) maintenance, improvement, renovation, refitting, refurnishing and enhancement of the College’s existing buildings and facilities including their interiors.
The reason behind the percentage split in the Wills can be gleaned from the evidence, in that the ANU was Mrs Pryor’s choice of residual beneficiary and the other two institutions were Mr Pryor’s choice for his share of the joint Estate. He had previously said to Ms Deborah Page, the Chairman at Wesley College, “I have three loves in life. One is Jenny. The other two are Sydney University Hockey Club and Wesley College. They have sustained me.”
The gift inter vivos (the 17 July donation)
About two weeks after the Wills were executed, on 14 July 2017, Mr Pryor emailed Ms Page at Wesley College. He wrote to her (emphasis added):
Dear Deborah, I am so sorry that I missed your call but my health has declined unfortunately. As a result, my own “window of opportunity” has resulted in the need for Brujen’s financial support to be applied immediately. Jenny and I would like to donate two million dollars ($2,000,000) towards the College building fund to support the renovation of the New Wing and the repair and maintenance the roofing materials, and slate roofs in particular.
We have updated the initial draft offer which I forwarded to you some time ago and attach it for your consideration. In view of the current situation I would like to forward a Brujen cheque for $2,000,000 by Express Post to Lisa and expressly request that it be immediately banked to the College Account and the necessary Tax Receipt issued without any delay.
I do hope that we can finalise this financial support immediately, in view of my current health.
With kind regards, Bruce
The reference to Lisa was to Ms Lisa Sutherland, the Master of Wesley College, who was also copied into the email correspondence. The letter that was attached was also dated 14 July 2017 and was written with Brujen’s address details in the top right-hand corner. It was an updated version of a draft letter which was prepared on 1 May 2017 (discussed below). The details of the authors at the bottom of the updated letter included Mr Pryor as “Director and Secretary” and Mrs Pryor as “Director”. There was no signature on the updated letter. Because of the later importance of the letter attached to the 14 July email, its contents are set out in full as follows (emphasis added):
Re. Wesley College “New Wing”
We have been very happy to support the initiatives taken by Council over recent years for the excellent completed work in both renovations and additions to the College buildings. We would now like to continue our support in such a manner as will bring forward and financially support the planned renovation of the so called “New Wing” which, as you know, is now over 47 years old, and was documented and so constructed at the time under Bruce Pryor’s direction as the “Project Architect”.
We proposed, on behalf of our company, Brujen Pty Ltd, to gift the sum of one million dollars ($1,000,000) to Wesley College for this project, provided that the following arrangements are acceptable to the College Council:
1. That his amount be given in July 2017, and will be receipted by the College as a “Tax Deductable” gift.
2. At the signing of the renovation contract, it will be announced that the old “New Wing” be then named after the Master of Wesley College, Lisa Sutherland, subject to her acceptance, in recognition of her initiatives and management of the building and renovation projections completed during her Terms as Master.
3. That the Architects for the above recently completed projects, together with their Project Architect, Warren Marsh, (either as their employee or as a Consultant to the College), and the Builder, Midson Constructions, be retained to design, document, build and administer the renovation work, subject to their availability and acceptance of a Contract.
4. In addition to the above donation a further one million dollars ($1,000,000) will be donated by Brujen Pty. Ltd. at the same time in July 2017 for the purposes of restoration and maintenance of the existing slate roofing and other roofing materials in the College buildings.
Subject to your Council’s approval, the acceptance of this offer will then be recorded in the Minutes of a Council meeting of Wesley College as a firm commitment to the donor.
We thank you, and your Council Members, for your continuing work for Wesley College.
The emphasised passages are directed to the purpose of the gift, which becomes important for the resolution of the issue in this proceeding.
Ms Page responded the same day. Among other things said in her personal email, she referred to the generosity to the College as being very humbling and confirmed, “Rest assured your cheque and tax receipt will be expeditiously handled”, and “Lisa and I will personally ensure your donation is applied to the Buildings in the manner we know is important to you.”
Three days later, Mr and Mrs Pryor sent a cheque from the bank account of Brujen in the amount of $2 million to Ms Sutherland at Wesley College (this being the actual 17 July donation). The cheque was accompanied by a handwritten letter. Again, the address details of Brujen were recorded in the top-right hand corner of the handwritten letter. It said:
We enclose our cheque in the sum of $2.m. (two million dollars) as a Donation to the College for the upgrade of the New Wing. Under the terms of our letter to the Chairman we have asked that this now be referred to as the Lisa Sutherland Wing.
We would also wish part of the Donation be put towards the repairs/replacement of the College roofs and other building maintenance work.
In addition, we also ask that our detailed wishes as set out in our email to the Chairman of 14th July 2017 be respected in the use of these funds.
It would be appreciated if this cheque be presented at your Bank as soon as possible.
On 19 July 2017, Ms Sutherland received the letter and the cheque and arranged for it to be banked. She deposed to then ringing Mr Pryor and having the following exchange:
Bruce, I have the receipt in front of me. The money is in the bank. I’m not feeling well but I will ring you and come down from next week. What day? I’m going to organise a flight.
Mr Pryor replied:
No no no. I don’t want you organising any plans Lisa.
That was the last time Mr or Mrs Pryor communicated with Wesley College.
The residue of the Estate
The total residue as at the date of hearing was $24,430,512.20, from which the following distributions have been made:
(a)$10,000,000 to the ANU;
(b)$6,000,000 to Sydney University Sport; and
(c)$3,000,000 to Wesley College.
The remaining $5,430,512.20 is held on trust pending the resolution of this proceeding and the legal costs associated with it. Wesley College has presently been paid less than Sydney University Sport despite each being entitled to 25 percent of the residue. That reflects the present dispute over whether the $2 million donation by Brujen was effectively an advance payment of part of Wesley College’s beneficial entitlement under the Wills.
What is meant by ademption in this case?
It is important to understand the principle with which this proceeding is concerned, as ademption has a number of applications and the doctrines of ademption and satisfaction are “not uncommonly the subject of common treatment”: Reynolds at [36], citing Royal North Shore Hospital v Crighton-Smith (1938) 60 CLR 798 at 814.
As a broad starting point, ademption concerns the destruction of the subject matter of a testamentary gift, whether by physical dealing (by the testator during their lifetime) or by operation of rules of equity: Fairweather v Fairweather (1944) 69 CLR 121 at 139.
In respect of the former, it most commonly arises where a specific gift under the will no longer forms part of the estate assets at the testator’s death for whatever reason (it may have been lost, destroyed, sold, or just given away before the testator died): Brown v Heffer (1967) 116 CLR 344 at 348. In such a case, the principle is that the beneficiary takes nothing and cannot trace the proceeds of the subject matter of the gift: Harrison v Jackson (1877) 7 Ch D 339 at 343-344. A detailed exposition of how ademption operates in that context is to be found in Appendix B to the judgment of RL v NSW Trustee and Guardian [2012] NSWCA 39; 84 NSWLR 263. No more need be said about that category of ademption as it is not raised for determination in this case.
The present case is concerned with the latter, being the operation of rules of equity. The equitable doctrine of ademption is not identical to the above principle, but it is an analogous concept: see generally J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) (Equity Doctrines & Remedies) at [33-005]. It may be traced back to the equitable rule against double portions, which was usefully explained in Reynolds at [18]-[22]:
18.The defendant contends that, having obtained a share (portion) of the deceased’s estate (property) via the inter vivos financial arrangements he made with her, the plaintiff has no entitlement to obtain a “double portion” of the deceased’s estate [under] the will.
19.The word “portion” is, in part, a function of intention; intention informed by purpose. A “portion” is generally spoken of as a gift intended by a will-maker/donor to establish a beneficiary/donee in life or to make substantial provision for him or her: In re Cameron, deceased [1999] Ch 386 at 407.
20.The questions for determination in this judgment turn, ultimately, upon an assessment of the deceased’s intention, an assessment implicitly informed by recognition that he had, or might reasonably be thought to have had, a moral obligation (or a purpose) to make provision for the maintenance, and advancement in life, of both the plaintiff and their daughter.
21.To the extent that there may have been an overlap in benefits conferred by the deceased on the plaintiff in his will and in their inter vivos financial arrangements, the defendant contends that there is a “presumption” that the deceased did not intend to give “the same” benefits to the plaintiff twice. Any such presumption is admittedly rebuttable, requiring attention to be given to the particular facts of the case.
22.The ultimate question for the Court is whether, on the evidence, the deceased intended that gifts in favour of the plaintiff in his will should stand notwithstanding financial arrangements into which he and the plaintiff entered subsequently to the making of the will: cf, Parker v Dowling (1916) SR (NSW) 234 at 237.
Save for the fact that the Court here is dealing with a testator’s gift to a stranger (Wesley College), rather than family members, and the additional overlay of the fact that the cheque was drawn from a company bank account rather than that of the individual testator, the above recitation of the issue and the ultimate question for the Court applies to the present proceeding mutatis mutandis.
In Reynolds at [39], Lindsay J discussed four situations (his Honour was careful to say “at least” four) in which a valid legacy might “adeem”. That discussion was then further distilled by Stanley J in the judgment of In the Estate of Wilkinson (deceased) [2018] SASC 200 into the following at [73] (emphasis added):
1.Where a gift of specific property prospectively made by will fails because it has been destroyed or transferred out of the ownership of the will maker upon his or her death;
2.When someone such as a parent, with an obligation to provide for another person, makes a will containing a gift to that person, but later in the lifetime of the donor makes a substantial gift to the donee, the gift inter vivos is taken to be a satisfaction pro tanto of the gift prospectively made in the will;
3.Where a will prospectively provides a gift for a particular purpose and the will maker subsequently makes inter vivos a gift for the same purpose; and
4.Where a will maker executes a will containing a gift (to be effected when, on the death of the will maker, the will becomes operative) and subsequently makes an inter vivos gift with the express intention (known to the donee at the time of acceptance of the inter vivos gift) that the inter vivos gift should adeem the testamentary gift pro tanto.
With due appreciation for the comprehensive discussion and authorities collected by Lindsay J on which the above passage was based, the bare summary of four different “illustrations of the operation of the concept of an ‘ademption’” (Reynolds at [40]) suffice to explain the applicable context in which the term “ademption” is used in the present case, being the third of the categories listed above. This third category was described in Roome v Roome (1744) 3 Atk 181 (Roome) (at [183]) as arising:
…in such instances where a testator gives a legacy for one particular purpose only, and after that applies a sum of money to the same purpose.
The second category is elsewhere referred to as “ademption of a legacy by a subsequent portion”, the third category as “ademption of legacy given for particular purpose” and the fourth category is described as “express ademption”: see Equity Doctrines & Remedies at [33-005], [33-035] and [33-045] respectively.
Ademption of Legacy Given for Particular Purpose – Intention and Purpose
It is helpful to set out some general principles about the approach the courts take in deciding whether the later gift of money effected an ademption of the testamentary gift in a will.
First, the court looks to the intention of the testator. In Reynolds, Lindsay J stated at [42]:
The intention of the will-maker is critical to the other three types [categories two, three and four] of ademption. They are reflective of: (a) a tendency in equity to lean against “double portions”; and (b) in the context of provision made for children of the will-maker, favour given to the maxim “equality is equity”. They share a common denominator in an inconsistency between a testamentary gift and an inter vivos gift, characterised as anticipatory of the testamentary gift, in circumstances in which the will-maker is found to have intended that the donee receive only one gift.
Second, whether the testator intended that the inter vivos disposition effect an ademption is a question of fact to be determined by evidence, if available, of the testator’s actual intention at the time an inter vivos disposition was made: Lake v Quinton & Ors [1973] 1 NSWLR 111 (Lake v Quinton) at 121, cited in Reynolds at [23].
Third, the evidence relevant to determining the testator’s intention is that showing the circumstances under which the subsequent gift was made, which includes what the donor said, did or thought, whether it was communicated to the donee or not. In Re Sparrow, deceased [1967] VR 739 (Re Sparrow) at 741-742, Little J set out a passage from the English authority of Re Pollock; Pollock v Worrall (1885) 28 Ch D 552 (Re Pollock) at 556, which included the following (emphasis added):
…numerous authorities have determined that if a legacy appears on the face of the will to be bequeathed (though to a stranger) for a particular purpose and a subsequent gift appears by proper evidence to have been made for the same purpose, a similar presumption is raised prima facie in favour of ademption. And it is clear from the authorities, that evidence of the circumstances under which the subsequent gift was made including contemporaneous or substantially contemporaneous declarations of the donor (whether communicated to the donee or not) may be admissible in such a case.
Fourth, for the category of ademption under consideration here, the testator’s intention in making the inter vivos gift may be presumed. In In re Everett; Executor, Trustee and Agency Company of South Australia v Everett (1917) SALR 52 (Re Everett), Murray CJ said the following at 65 (emphasis added):
Ademption depends on the intention of the donor. In some cases the intention is presumed. In others it must be express. In the former it need not have been specifically brought to the notice of the donee; in the latter it is essential that it should have been.
An intention to adeem is presumed in only two classes of cases: (1) where a father or person in loco parentis gives a legacy to a child of his own or to a person towards whom he stands in loco parentis, and subsequently makes a gift or advance of substantially the same quality as the legacy to the same child or person during his lifetime; and (2) where a person gives a legacy for a particular purpose and subsequently makes a gift or advance to the legatee for the same purpose. In these cases it is presumed that the donor did not intend that both benefits should be taken, but meant the gift to be in satisfaction of the legacy either wholly or pro tanto according as the amount of the gift is equal to or less than the amount of the legacy. The presumption, however, may be rebutted by evidence shewing that the donor intended both gift and legacy to have effect, and this in its turn may be met by evidence in confirmation of the presumption.
A more extensive incorporation of the above statement may also be found in Reynolds at [45]. Lindsay J went on at [46] to note the affinity between the two classes of case, in that both are governed by a purpose of one description or another, express or implied. In the case of the family member, the purpose might be an implied provision for maintenance or advancement in life. His Honour then stated at [47]:
In these cases the law looks to see if there is such an identity between a gift by will and a subsequent inter vivos disposition to support an inference that the inter vivos gift was made in anticipation, and fulfilment, of the testamentary gift.
Fifth, in the case of a presumed intention to adeem, the donor’s intention does not need to have been expressed at all; it may be “irresistibly drawn from all the circumstances of the case”: In re Cameron (deceased) [1999] Ch 386 (Re Cameron) at [64], citing In re Eardley’s Will [1920] 1 Ch 397 at 405. That feature is distinguishable from the fourth category of ademption (express ademption), where a gift is made on the condition that the legacy should not be claimed. In that situation, the donee must be on notice of such an intention.
Sixth, as stated in the extract of Re Everett above, the presumption is rebuttable by evidence showing that the donor intended both gift and legacy to have separate effect: see also Re Cameron at [63]. To put it another way, the presumption may be rebutted by evidence that at the time of giving the inter vivos gift, the testator did not intend it to be in satisfaction of the testamentary legacy. The question is whether there is sufficient evidence in that regard to rebut the presumption: Seaborn v Marsden (1926) 26 SR (NSW) 485 at 499. As Little J explained in Re Sparrow at 745 (citations omitted):
Presumptions, however, do not cover the whole field of ademption, they merely afford a means of ascertaining intention, which may otherwise be actually expressed in, or be clearly gathered from the relevant document or documents. If an instrument later in point of time than a will expressly declares that the provision is makes for a particular person is to be in satisfaction of, or in substitution for, a disposition made by the will in favour of that person, it must be given its intended effect. A party claiming under and taking the benefit of the second instrument cannot have the benefit it confers and at the same time refuse to give full effect to that instrument. The same result ensures if the language of the later instrument speaks the like intention.
Finally, the application of the equitable doctrine applies despite the enactment of the Wills Act 1968 (ACT) which has not abolished the doctrine. It may seem anomalous that there is space for the doctrine to operate in the face of a statute which provides for the formal requirements of the making of a will in order to be valid, when an informal will may be given effect (s 11A), for rectification of a valid will for failure to carry out an intention (ss 12A), and when a will may be revoked (s 21). The anomaly was discussed in Reynolds in the context of NSW legislation and Lindsay J said at [66]:
Where the rule against double portions applies it is rationalised, vis a vis the formal requirements of will-making, by characterisation of its operation, not as an implied revocation of a will, but as an acceleration of the enjoyment of the provisions of the will: In re Cameron, deceased [1999] Ch D 386 at 417 and 421 D; Lake v Quinton [1973] 1 NSWLR 111 at 122B and 122E.
When will the presumption arise?
The equitable presumption against double portions is not available outside the context of a legacy for a child (or a person similarly placed) or where there is a legacy for a particular purpose (whether it be express or implied): Reynolds at [49]. Here, the application of the latter context is at issue.
Two conditions must be satisfied before a presumption of ademption for this type of equitable doctrine will arise: first, the gift is given by the same person who leaves the legacy, and second, the gift is for the same purpose as that given in the will.
The first of those conditions is self-evident in the various authorities, but I have described it as a condition here because there is an argument in this case that the identity of the testator (Mr and Mrs Pryor) and the donor of the gift (Brujen) were not the same.
The second requires a little further explanation as it draws attention to how the “particular purpose”, or “special use” (being the language used in Re Pollock, extracted below) is described and what might constitute “the same purpose” such as to effect ademption. The Court’s task is to work out the intention of the donor. In doing so, the purposes of the legacy and the subsequent gift need not be expressed in identical terms before it may be found that the donor intended his or her inter vivos gift to adeem the testamentary legacy. What is required is that the purpose of the gift be sufficiently similar to support the inference that the donor intended the gift to be made in anticipation and fulfilment (partial or otherwise) of the legacy. This is described in Reynolds at [109] as “substantial identity”.
Further, the terms of the will need not expressly state the purpose or moral obligation to be fulfilled. It is sufficient if such purpose or obligation appears from the terms of the will Re Sparrow at 743. That is, it is sufficient if the purpose or obligation can be worked out by implication or inference. That is seen from various statements set out in the authorities. Continuing the paragraph set out at [35] above in Re Pollock, Selborne LC said at 556 (emphasis added):
...evidence of the circumstances under which the subsequent gift was made including contemporaneous or substantially contemporaneous declarations of the donor (whether communicated to the done or not) may be admissible in such a case [to determine a particular purpose]. To constitute a particular purpose within the meaning of the doctrine it is not, in my opinion, necessary that some special use or application of the money, by or behalf of the legatee (e.g., for binding him an apprentice, purchasing for him a house, advancing him upon marriage, or the like), should be in the testator’s view. It is not less a purpose, as distinguished from a mere motive of spontaneous bounty, if the bequest is expressed to be made in fulfilment of some moral obligation recognised by the testator, and originating in a definite external cause, though not of a kind which (unless expressed) the law would have recognised, or would have presumed to exist…The reasonable presumption is the same, namely, that as the purpose of both gifts was to fulfil one and the same antecedent obligation or duty, a double fulfilment was (presumably) not intended.
Drawing all this together, if a person in their will leaves a legacy for a close friend “for the purpose of furthering her education” and two weeks before their death, gives the friend their car, it is unlikely that the gift of the car would adeem the money left for the friend in the will. If on the other hand, the person instead wrote a cheque for the friend in the amount of $10,000 for enrolment in the degree of her choosing, which was presented before the person’s death, there may be a presumed ademption, in whole or in part, depending on any other surrounding circumstances which established one way or the other whether the person intended the cheque to be in addition to, or in substitution for, the legacy provided in the will.
The task then, initially of the Executor and now of the Court, is to put on the imaginary deerstalker hat, and with magnifying glass in hand, search among the evidence to see if in all the circumstances of the particular case, there is such an identity between the gift by will and the subsequent inter vivos disposition to Wesley College as to give rise to an inference that what the Pryors gave to the College when they were alive was made in anticipation, and fulfilment, of the testamentary gift specified in the Wills.
The positions of the parties
The Executor’s position was that:
(a)the gift was made by the same person as the Legacy;
(b)the purpose of the gift fell within the purpose of the Legacy;
(c)the presumption therefore arose; and
(d)the surrounding circumstances did not rebut the presumption; they confirmed it.
Wesley College submitted the opposite:
(a)There was no identity of legal personalities between Brujen as donor and Mr Pryor as testator.
(b)If the Court found otherwise, then the purpose of the gift (the 17 July donation) was different to the Legacy, because it covered specific purposes when the Legacy was in more general terms, and there were conditions attached to the gift that did not apply to the Legacy.
(c)Even if the Court found there was such similarity as to cause the presumption to arise, the surrounding evidence should satisfy the Court that it was not Mr Pryor’s intention that the gift partially adeem the Legacy, and consequently the presumption should be found to have been rebutted on the evidence.
Was the gift or disposition made by the same person here?
It is uncontroversial that the 17 July donation was made by Brujen. The cheque and letter sent on 17 July 2023 reflect as much, both being in the name of Brujen.
However, the evidence was that Brujen was a tax-effective vehicle used by Mr and Mrs Pryor to carry out their personal wishes. Mr and Mrs Pryor structured their financial affairs through two wholly owned companies: Brujen, and Sayota Pty Ltd (Sayota). Mr and Mrs Pryor had set up a family trust known as the Pryor Trust, of which Sayota was the trustee. The corporate structure of those entities was as follows:
(a)Brujen had two shareholders: Mr Pryor, who held 100 redeemable preference shares, and Sayota who held 100 ordinary shares; and
(b)Sayota had two shareholders: Mrs and Mr Pryor who held one share each.
The practical effect of the above arrangement was that Mr Pryor controlled 75 percent of Brujen, and Mrs Pryor controlled 25 percent. Clause 8.2 of the Wills directed that Brujen, Sayota and the Pryor Trust would be wound up with their assets to be disposed of as part of the residue of the estate.
The Executor therefore argued that because Brujen was wholly owned by Mr and Mrs Pryor, in substance, the 17 July donation was made by the individuals.
It is trite that in equity, substance and not form govern the assessment. Had it been necessary to decide, I would have accepted the Executor’s submission that for the purposes of deciding whether the equitable doctrine was capable of applying, Brujen was an extension of Mr and Mrs Pryor. The gift came out of Brujen’s bank account and it was Brujen’s assets that were to form the majority of the residue when the company was wound up under the will.
However, the detailed resolution of the point is unnecessary, as the finding with regard to the second condition, considered next, is dispositive of the application.
Was the 17 July donation made for the same purpose as the Legacy?
Starting with the Will, the purpose was express, deriving from its terms. The gift of 25 percent of the residue was to be applied (set out again, for ease of comparison):
…toward the following under the direction of an independent firm of Architects experienced with the design and cost control of such projects:
A)maintenance, improvement, renovation, refitting, refurnishing and enhancement of the College’s existing buildings and facilities including their interiors.
The 17 July donation was also expressed as having a specific purpose. The sum of $2 million was to be applied:
…for the upgrade of the New Wing, under the terms of our letter to the Chairman we have asked that this now be referred to as the Lisa Sutherland Wing.
We would also wish part of the Donation be put towards the repairs/replacement of the College roofs and other building maintenance work.
There are obvious similarities between these two purposes:
(a)The project of renovating the New Wing, an existing building falls within the purpose expressed in the Will of maintenance and improvement of the existing buildings.
(b)The additional $1,000,000 for the restoration and maintenance of the College roofs also falls within that purpose.
In the letter, there is a reference to “other building maintenance work”. The email with the proposal of 14 July 2017 –which the letter incorporated by making express reference to it – is in narrower terms and only describes the additional donation as being for the purpose of renovation to the roofs. Either way, the descriptions fall within the general purpose provided in the legacy at (A) of being “maintenance, improvement, renovation” of the College’s existing buildings.
Both the Executor and Wesley College drew to the Court’s attention various authorities as being analogous or distinguishable from the above facts. There are cases either way which can be used to demonstrate that the two purposes above were either the same or different. Ultimately though, I do not consider they establish any principle that may be extracted to assist in resolving the question of whether similar purposes are the same purpose. Specifically, among the authorities I have not discerned a general proposition that where the purpose of the gift inter vivos is a subset of the purpose provided under the will, that constitutes the same purpose; nor is it necessarily a different purpose.
In Roome, a testator left £1,000 in his will for the “maintenance and education” of his grandson, and for “binding his said grandson apprentice, or setting him up in the world”. Subsequently, the testator paid £126 to apprentice his grandson to a haberdasher. It was held that there was no ademption pro tanto (to the extent of the amount paid), as the £1,000 specified in the will was given not only for apprenticing the grandson, but for other purposes such as maintenance – and the executors of the will were not obligated to use the legacy for procuring an apprenticeship at all.
In Re Sparrow, a testator left half of his residuary estate to his wife, with the income of the corpus of the residuary to be paid to the wife in her widowhood in the amount of at least £5 per week. The couple subsequently divorced and entered into a deed of separation, which provided that the husband or his estate should provide £14 5s. per week for the wife’s maintenance. It was held that the deed adeemed the will, as the legacy also proclaimed the same purpose of maintenance of the wife and the benefits were sui generis (that is, the type of benefit was of a particular class of its own).
In Re Corbett; Corbett v Lord Cobham [1903] 2 Ch 326, a testator bequeathed £10,000 to the trustees of the endowment fund of the Corbett Hospital in Stourbridge. Prior to his death he advanced a cheque for £10,000 to the trustees of the endowment fund, writing that it was intended to “endow the hospital”. It was held that as both the legacy and the donation were for the particular (although general) purpose of endowment the legacy was adeemed. However, in Re Leggatt (1908) VLR 385 (Re Leggatt) at 389, A’Beckett J made the important point that in Re Corbett there was evidence that the testator had intended the gift in his lifetime to be a satisfaction of the legacy.
In Re Leggatt, a testatrix bequeathed £2,500 to be held on trust and applied by trustees “in or towards the erecting of a Presbyterian Church including all necessary fittings and accessories and manse at Daylesford... in their absolute and uncontrolled discretion.” Subsequently, the testatrix donated £1,700 inter vivos to the construction of a new church when it proceeded. The design of the new church built was a compromise, with a shortened spire, no minister’s room and no proper approach. A’Beckett J said at 388, in finding that there was no ademption:
The bequest in this will is for several purposes, the application to one or all of them being discretionary. Only one could be said to have been accomplished in the lifetime of the testatrix, and that imperfectly, by the building of the new church. The new manse has yet to be built.
His Honour found that the purposes were not the same. On that finding alone, there was no ademption. However, (and relevant to the reasons that follow) his Honour also went on to refer (at 389) to the evidence which was “of the clearest character” that the testatrix intended the gift in her will to stand, notwithstanding the gifts made after its date, and that she considered none of the purposes designated in her will as satisfactorily achieved.
In the case here, the purposes are not the same, for the following reasons:
(a)The renovation of the New Wing was a specific project identified as being for the purpose of $1 million of the 17 July donation. There is no reference to that project at all in the Legacy provided in the Will. The Legacy may have been properly applied to the maintenance and improvement of Wesley College without spending a cent on the New Wing.
(b)That observation may equally be made for the remaining $1 million of the 17 July donation. The specific purpose of that part of the gift was to fund renovation or replacement of the College’s roofs. While it included other building maintenance work, the overriding purpose was the roofing project. Again, that project is not named at all in the Will and the Legacy could have been equally applied to building maintenance that did not include the roofing project.
(c)The Legacy has a broader scope, in that it also envisages refurnishing and enhancement of the College’s existing buildings and facilities including their interiors. The specific projects identified in the 17 July donation did not specifically include the interiors of the buildings.
(d)There were various conditions attached to the 17 July donation. The name of the particular project (the New Wing was to be renamed to the Lisa Sutherland Wing) was important, and the architect firm and the building firm to carry out the project was specified, subject only to the firms’ willingness to take on the contract.
I accept that there is a way that the two purposes could be applied so that it is said they directly overlap, and given the timing of the Will and the 17 July donation, Mr and Mrs Pryor may well have envisaged that the Legacy would be spent on the New Wing and the roofs. However, what follows from the matters I have set out is that there is also a way that the cheque for $2 million and the residual share under the Legacy could each be spent such that there was no overlap at all. In those circumstances, I do not think that it can be said that there is such an identity between the gift by will and the subsequent inter vivos disposition to support an inference that the inter vivos gift was made in anticipation, and fulfilment, of the testamentary gift.
That conclusion means the presumption of ademption does not arise.
However, in the event that I am wrong, I have proceeded below to consider the position where the presumption of ademption did arise, and whether the surrounding circumstances were such as to rebut or confirm the intention of Mr and Mrs Pryor.
Is the presumption rebutted by the surrounding circumstances as to intention?
A number of surrounding circumstances are relevant to whether the 17 July donation was intended to be an advance payment of the legacy in the Will. They are:
(a) A conversation Mr Pryor had with Wesley College (Ms Page) on 3 April 2017.
(b) The terms of previous wills executed in May 2014, which were then amended in June 2017.
(c) The donation that Mr and Mrs Pryor had made to the Hockey Club before amending their Wills.
(d) The intention evident from the July 2017 correspondence to Wesley College.
(a) 3 April 2017 – the “window of opportunity”
The first was a script written and signed by Mr Pryor of a phone call he made to Ms Page, which bears the heading “New Wing 12 noon, 3 April 2017” (emphasis added):
While we have nominated Wesley in our wills, we may not have College Councillors as amenable to restoration [of or] maintaining our great buildings at that future time.
We now have a wonderfully successful “team” – for want of a better term, which has successfully completed a number of major building projects, and numerous smaller renovations, over the years since the current Chairman and Master have been in charge.
In addition we have been fortunate to have my recommended architects PMDL and project architect W. M. (assisted by Thom Silvius).
All these represent a “window of opportunity” which may not last past next year for obvious reasons of tenancy. We have major renovation works currently planned for “New Wing”, for which, as you know, I was personally responsible for the design, documentation and supervision of construction when employed by F. M. & ML in 1968-69.
We would like to propose to Council, as anonymous donors, a total of $[left blank] towards this New Wing renovation, this to be payable by our company Brujen P/L in two equal tranches in the 2017/18 financial year and the 2018/19 financial year.
We wish to request to Council that once a decision to proceed with the “New Wing” [renovations has been made,] it should then be named after the current Master, Lisa Sutherland.”
There are two final paragraphs concerning the wish to remain anonymous and putting the proposals before the College Council. The file note concludes:
She was thrilled – “it made her day” and will put this to the College Council next meeting.
It can be seen that the above note was Mr Pryor writing out what he was going to say to Ms Page, and then the bottom comment confirms that the phone conversation had taken place.
There is a further record of the conversation contained in a second file note made on 15 April 2017 and signed by Mr Pryor, parts of which are as follows (emphasis added):
On Monday April 3 I phone Wesley Chairman, Deborah Page, to say that I believed that J. and I have a “Window of Opportunity” which may not last for more than a year.
I said that Wesley was included in our wills, but by the time they are actioned the current Chairman, Master, Council, architects (including Warren Marsh) may not be involved in the decision making on the building restoration and renovation, to which we have always directed our support.
I note that Deborah must retire from Council in April (check?) next year. The Master a year or two later could retire as her contract expires. Other key people such as PMDL Architects and Architect Warren Marsh may not be available in future also.
Now that the restoration of “my” “New Wing” is foreshadowed, subject to finance I believe, we would like to commit $1.m. to its cost subject to the following conditions:
(1)That the old (47 years) “New Wing” be now named after the current Master, Lisa Sutherland, who has been responsible for the initiation and management of major, and minor, renovation work, mostly neglected over past years of successive masters since Norman Webb and Bertram (“the Ram”) Wyllie. Such examples include “the Fountain Courtyard” – formerly a mess of uses and neglect – and unresolved access, the Purser Wing additional floor – “the Lee Floor,[”] the Bruce Pryor Wing, bathroom renovations throughout and the “Palm Court” of course. Now in planning under her direction is the “New Wing” renovation, and the rectification or replacement of 100 year old roofing slates and flashings on the original buildings.
(2)That this renovation of the “New Wing” be undertaken under the management of P.M.D.L Architects, with, if possible, architect Warren Marsh in charge – either as their employee, or as a separate consultant engaged by the Colleg[e].
(3)That the donation will be from Brujen Pty Ltd. And will be made in two equal tranches of $500,000 during two successive financial years after the commencement of renovation contract on site.
(4)…
The note then refers to the request for confidentiality, and a desire for a small brass plate to be fixed inside the entrance to the “New Wing” with acknowledgments which included that Bruce Pryor was the project architect from 1956. It also records Ms Page’s enthusiastic agreement to put the proposal to the next Wesley College Council meeting.
The second file note has another page which states:
Postscript. To Brujen Pty Ltd
I would like to think that this offer to assist Wesley will be carried out by Brujen Pty Ltd in accordance with this note. It is a firm commitment by the directors of Brujen Pty Ltd which should be honoured by Brujen, no matter who the directors are at the time.
P.S. The intention is to sell shares in companies owned by Brujen which show a significant capital gains tax liability when sold, which will be offset by this $ donations to Wesle[y].
Mr Pryor then listed some of the shares to be sold by way of example. It included the shares in “Woolworths”.
These two file notes have been set out in some detail because in my view, they are significant in telling the story of what was going on in terms of Mr Pryor’s intention for what ultimately became the 17 July donation.
At the time that 17 July donation was first being proposed to Wesley College, Mr and Mrs Pryor had yet to amend their Wills. The proposed donation was a “firm commitment” and Mr Pryor even set out in the postscript how the donation was to be funded – the intention was to sell shares in companies owned by Brujen, which included the Woolworths shares.
On 1 May 2017, Mr Pryor sent the College an email confirming the details that had been discussed in the phone conversation. He attached a draft of the proposal. The donation envisaged in the draft was $1 million, payable in two tranches of $500,000.
Ms Page responded on 1 June, apologising for the delay in updating Mr Pryor and explaining the reason for the delay was that they were trying to progress things with the architect PMDL, such that they could be confident they had a viable project to renovate New Wing “before we lock you in to your generous offer”.
Mr Pryor responded by email on 2 June 2017, saying:
Thank you Debbie, I perfectly understand your need to have cost estimates completed before your Council can commit to the project…
(b) The previous wills and the amendments made to it
That context of the history to the 17 July donation is significant for what happened next.
Mr and Mrs Pryor had each executed a will in May 2014. The terms of the previous wills included provision for the shares in Brujen to be gifted to Wesley College with 75 percent of the residuary estate given to the Hockey Club, and 25 percent of the residuary estate given to the Wesley College Foundation.
The amendments Mr Pryor requested his solicitor to make to his testamentary wishes in May 2017 reduced the percentage of the residue to be given to the Hockey Club (discussed separately below) and deleted the gift of the shares in Brujen to be gifted to Wesley College. At the time those amendments were requested, and ultimately made, through the execution of the Wills on 28 June 2017, Mr Pryor knew that a significant proportion of the shares in Brujen would be sold to fund the donation that he and Mrs Pryor had committed Brujen to making to Wesley College.
The inference that I think is to be drawn is that, even though the 17 July donation had yet to be paid over to Wesley College, that “firm commitment” was taken into account by Mr and Mrs Pryor in the amendments they made to their wills. Had Mr and Mrs Pryor intended the 17 July donation to be treated as an advance payment from the 25 percent residue, they had the opportunity to reduce the percentage when working out the amendments to their Wills as the donation was very much in contemplation at the time.
In one of the cases referred to earlier, Roome, after the testator in question in that case had paid out the sum for an apprenticeship, the testator added a codicil to his will, which the Master took as relevant in establishing that there was no intention that the inter vivos gift in that case adeem the legacy, as seen from the following extract at 907:
It appears too manifestly by one circumstance, the testator did not intend himself there should be any ademption of the thousand pounds, and that is the codicil (made above a year after the hundred and twenty-six pounds had been laid out for apprenticing the defendant), which is a confirmation of the legacy, and amounts to a republication of the will.
If the testator had any intention of deducting the hundred and twenty-six pounds out of the thousand pounds, he had a fair opportunity of doing it when he was adding a codicil; and as he has not done it, it will be the greatest equity to decree the whole thousand pounds to the defendant, the grandson of the testator …
Here, the amendments and execution of the Will was really a process occurring in tandem with the finalising of the 17 July donation. That is confirmed by a solicitor’s file note made on 24 May 2017, when Mr and Mrs Pryor met with the plaintiff to discuss estate planning documents. It is recorded in the file note that the Pryors intend to dispose of further assets during their lifetime through Brujen, including donations to charitable organisations.
Mr and Mrs Pryor had the opportunity to reduce the percentage of residue left to Wesley College. That they chose not to speaks to their intention that the anticipated donation was separately to come out of Brujen’s shareholdings, and not to be viewed as an advance out of the College’s 25 percent share of the residuary Estate.
Consistent with that inference, Brujen then did sell shares in Woolworths in order to fund the 17 July donation.
(c) The inter vivos gift to the Hockey Club
The 17 July donation did not occur in a vacuum. Mr and Mrs Pryor had a pattern of making generous gifts, including to Wesley College. These included funding renovations of E Wing, a new third floor for the Purser Wing and the building of a new courtyard. The only difference was the fact that the last donation was made after Mr and Mrs Pryor amended their Wills. Given the history of donations to Wesley College, it is unlikely that Mr and Mrs Pryor had any different intention for that final gift.
Moreover, Mr Pryor’s record keeping of their intentions and commitments when making these gifts is useful when searching for the intention with respect to the 17 July donation. Of significance is the donation Brujen made of $1,000,000 in two equal instalments ($500,000 on 6 June 2016 and $500,000 on 6 March 2017) to the Hockey Club, to be put towards the construction of a new home ground turf for the Club.
There is a handwritten record of this which includes the following:
Memo to Wills File – re. Brujen Pty Ltd
In October 2015 Brujen Pty Ltd signed a “Deed of Gift” to the University of Sydney.
This commits Brujen to pay $500,000 before 30/6/2016* (subject to conditions) and another $500,000 before 30/6/2017 (subject to conditions)
…
Irrespective of the outcome or whatever, of our wills becoming applicable and executed, Brujen has an ongoing requirement to conform with this Deed of Gift.
The note is signed and there are then notations on the record striking through the paragraphs and recording that each instalment had been paid on particular dates. When recording that the second instalment was paid on 6th March, Mr Pryor wrote: “Final Payment. Balance = Nil.”
This is a further indication of a man who was meticulous about file noting his commitments and their consequences. I have found this evidence to be relevant to the 17 July donation because it demonstrates that Mr Pryor had the contents of his will in mind when making donations, and the gift he made to the Hockey Club was expressly made independently from what the earlier will he made provided.
The type of note is also relevant for the similarities it bears to the postscript that has been set out in relation to the 17 July donation at [76] above. It is true that the postscript with regard to the contemplated gift to Wesley College does not reference the Wills in express terms. What is says is “no matter who the directors are at the time.” However, I think it can fairly be said that when Mr Pryor wrote those words, he did not have in his contemplation that he or Mrs Pryor would be resigning in the future from their directorships of Brujen. What he was referring to was the fact that new directors may be appointed to Brujen after their deaths. Accordingly, that implied reference supports the inference of the gifts sitting alongside the Wills, and not being in partial substitution of the Legacy.
(d) The July 2017 correspondence
It remains then, to return to the email and letter sent by Mr and Mrs Pryor in July 2017 and to view those documents in the light of the surrounding circumstances set out above.
In speaking of his own “window of opportunity”, Mr Pryor was referencing the window of opportunity he had previously spoken about for the project of renovating the New Wing. When he spoke of the intention to “bring forward” and “financially support the planned renovation” of the New Wing, he was speaking of paying a nominated sum of money to get the project underway earlier, he was not speaking of bringing forward part of the payment of a residual legacy as an advance.
In what might perhaps be seen as a reflection of his meticulous nature, Mr Pryor did not ultimately want to leave the gift to Wesley College and what was to be done with it to chance. Because of his health diagnosis, he could not delay, awaiting cost estimates and uncertainty. His clear intention was to personally ensure that his own professional legacy, the New Wing at Wesley College, was left with the money required to specifically look after its renovation, by the people he trusted, right down to who it would be named after and where the plaque stating the architects would be by the door.
I do not think that Mr Pryor’s desire to fund the specific project can be interpreted as any intention to partially adeem the Legacy. In fact, quite the reverse is true given Mr Pryor’s personal connection to Wesley College and history of support to it. It is clear that he (and Mrs Pryor) wanted the College to be the best it could be.
Mr and Mrs Pryor were making, or arranging to make, these sizeable donations in full knowledge that the wills they were about to execute would include provision in the residue by way of percentages for particular purposes. Had the College simply accepted the proposal in April 2017 when it was first formally put, and brought the architects on board immediately, the cheque would have been written and sent before the Wills were executed and the whole genesis for this proceeding (the fact that the gift was made after the Wills were signed) would have evaporated.
While the payment of $2 million shortly before their deaths would necessarily result in less money being paid into the residue for distribution, there are no words in that correspondence to indicate it was intended that the gift was in substitution for, or would alter the proportion of, the residue that Wesley College would ultimately receive. The intention that the $2 million effected an ademption of part of Wesley College’s share in the residue is not an inference “irresistibly drawn from all the circumstances of the case” to recall the language of Re Cameron.
For these reasons, taking into account the surrounding circumstances, in particular the history to the inter vivos gift and its specific purposes, together with the proximity with which the 17 July donation was made to the amending and execution of the Will, the inference to be drawn is that the 17 July donation was not intended to be in substitution for the Legacy.
Conclusion and Orders
As there was no ademption, the declaration sought by the Executor will not be made. The declaration being the only relief sought, the proceeding will be dismissed.
The Executor sought the resolution of this discrete question through an application for declaratory relief. As submitted by the respondent, it could equally have been made as an application for judicial advice under s 63(1) of the Trustee Act 1925 (ACT).
As it has transpired, the result means that the costs consequences are ultimately the same. On an application for judicial advice, the costs of the proceedings would have come out of the Estate: see r 1732 of the Court Procedures Rules 2006 (ACT). On the present application, Wesley College having been successful, the Executor should pay its costs, with such costs in turn being indemnified by the Estate pursuant to s 59(4) of the Trustee Act 1925 (ACT). The appropriate course then, is to order that the costs of the proceedings be paid by the Estate.
The Order of the Court is as follows:
(1) The application is dismissed.
(2) The costs of the proceedings are to be paid out of the Estates of the late Bruce Pryor.
| I certify that the preceding one-hundred and seven [107] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice McWilliam. Associate: Date: 7 July 2023 |
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