The Public Trustee as Executor and Trustee of the Estate of Mary Agnes Horsfall v Halleen
[2000] WASC 262
•26 OCTOBER 2000
THE PUBLIC TRUSTEE as Executor and Trustee of the Estate of MARY AGNES HORSFALL -v- HALLEEN & ORS [2000] WASC 262
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 262 | |
| Case No: | CIV:1450/1999 | 4-5 OCTOBER 2000 | |
| Coram: | SCOTT J | 26/10/00 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Shares and stock not inclusive of interest bearing investments Land bequest adeemed | ||
| PDF Version |
| Parties: | THE PUBLIC TRUSTEE as Executor and Trustee of the Estate of MARY AGNES HORSFALL PATRICIA MOLLY HALLEEN PETER GRAHAM SOUTH JOAN ODNA BORLAUG THE UNIVERSITY OF WESTERN AUSTRALIA |
Catchwords: | Wills Meaning of "all my shares and stock in all companies" Whether debenture stock and interest bearing investments included Ademption Property devised in will ceased to exist by reason of subdivision Amalgamation before death Sale of part of land and amalgamation of balance before death adeemed bequest |
Legislation: | Public Trustee Act 1941 |
Case References: | Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404 Brown v Heffer (1967) 116 CLR 344 Ex parte The Public Trustee in and for the State of Western Australia as Administrator of the Estate of Elizabeth Hartigan, unreported; SCt of WA; Library No 970736; 9 December 1997 Fairweather v Fairweather (1944) 69 CLR 121 Grey v Pearson [1857] VI HLC 61 1216 In re Everett [1994] 1 Ch 176 In re O'Connor [1970] NI 159 In re Purnchard's Will Trusts. Public Trustee v Pelly [1948] 1 Ch 312 In the Matter of the Will of Arntd [1990] WAR 5 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 Lutheran Church of Australia South Australian District Inc v Farmers Executive Trustees Ltd (1970) 121 CLR 628 Mustard v Oikononov, unreported; SCt of WA (Owen J); Library No 980468; 19August 1998 Permanent Trustee Co Ltd v State of New South Wales & Ors; unreported; SC NSW; Library No 9100995; 5 September 1991 Morrice v Aylmer (1875) LR HL 7 Permanent Trustee Co Ltd v State of New South Wales & Ors; unreported; SC NSW; Library No 9501781; 21 November 1995 Re Alleyn (1965) SASR 22 Re Bell [1969] VR 595 Re Bodman [1891] 3 Ch 135 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Applicant
AND
PATRICIA MOLLY HALLEEN
First Respondent
PETER GRAHAM SOUTH
Second Respondent
JOAN ODNA BORLAUG
Third Respondent
THE UNIVERSITY OF WESTERN AUSTRALIA
Fourth Respondent
Catchwords:
Wills - Meaning of "all my shares and stock in all companies" - Whether debenture stock and interest bearing investments included
(Page 2)
Ademption - Property devised in will ceased to exist by reason of subdivision - Amalgamation before death - Sale of part of land and amalgamation of balance before death adeemed bequest
Legislation:
Public Trustee Act 1941
Result:
Shares and stock not inclusive of interest bearing investments
Land bequest adeemed
Representation:
Counsel:
Applicant : Mr D L Jones
First Respondent : Mr C B Edmonds
Second Respondent : Mr R A C Cullen
Third Respondent : Mr R A C Cullen
Fourth Respondent : Mr J D Allanson
Solicitors:
Applicant : The Public Trustee
First Respondent : Jackson McDonald
Second Respondent : Dwyer Durack
Third Respondent : Dwyer Durack
Fourth Respondent : Blake Dawson Waldron
Case(s) referred to in judgment(s):
Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404
Brown v Heffer (1967) 116 CLR 344
Ex parte The Public Trustee in and for the State of Western Australia as Administrator of the Estate of Elizabeth Hartigan, unreported; SCt of WA; Library No 970736; 9 December 1997
Fairweather v Fairweather (1944) 69 CLR 121
Grey v Pearson [1857] VI HLC 61 1216
In re Everett [1944] 1 Ch 176
In re O'Connor [1970] NI 159
(Page 3)
In re Purnchard's Will Trusts. Public Trustee v Pelly [1948] 1 Ch 312
In the Matter of the Will of Arntd [1990] WAR 5
Case(s) also cited:
Charles v Federal Commissioner of Taxation (1954) 90 CLR 598
Lutheran Church of Australia South Australian District Inc v Farmers Executive Trustees Ltd (1970) 121 CLR 628
Mustard v Oikononov, unreported; SCt of WA (Owen J); Library No 980468; 19August 1998
Permanent Trustee Co Ltd v State of New South Wales & Ors; unreported; SC NSW; Library No 9100995; 5 September 1991
Morrice v Aylmer (1875) LR HL 7
Permanent Trustee Co Ltd v State of New South Wales & Ors; unreported; SC NSW; Library No 9501781; 21 November 1995
Re Alleyn (1965) SASR 22
Re Bell [1969] VR 595
Re Bodman [1891] 3 Ch 135
(Page 4)
1 SCOTT J: By originating motion dated 29 April 1999, the applicant applies to the court under s 58 of the Public Trustee Act 1941 for the resolution of two issues arising out of the will of Mary Agnes Horsfall ("the deceased"). The two questions for resolution are expressed in the originating motion as:
"(a) [whether] the land situate at and known as 26 Gibney Street, Cottesloe devised to Peter Graham South has been adeemed by subdivision and amalgamation with the adjoining properties at 24 and 28 Gibney Street, Cottesloe registered on 9 July 1990; and
(b) [whether]
(i) investments in Unit Trusts, Westpac Australian Bond Fund 36544.18 units, Westpac Moderate Growth Fund 45994.87 units and Westpac Balance Growth Fund 74399.54 units; and
(ii) investments with Australian Guarantee Corporation Limited described as Income Bonds in Certificates of Debenture Stock numbered 17318777, 37213786 and 37275154
and which were assets of the deceased's estate at the time of her death form part of the bequest to Odna Borlaug of 'all my shares and stock in all companies together with any dividends accrued or accruing ...'"
2 For the convenience of the parties, the second issue was resolved first. The first respondent has no interest in the second issue and so, in order to save costs, counsel for the first respondent was excused whilst that issue was argued.
3 Both issues arise out of the last will and testament of the deceased dated 18 January 1990 which was admitted to probate on 25 August 1998.
4 An extract of the provisions of the will, reveals the two questions that fall for consideration:
"I DEVISE and BEQUEATH:
(a) my land situate at and known as 26 Gibney Street Cottesloe to PETER GRAHAM SOUTH
(Page 5)
- (b) all my shares and stock in all companies together with any dividends accrued or accruing thereon at my death to ODNA BORLAUG."
5 It is convenient to deal with the bequest arising under par (b) first, as that issue was argued first.
6 Although there is conflicting evidence with respect to the specific details of the investment and debenture stock, the court was referred to exhibit "F", being the affidavit of J O Borlaug sworn 26 August 1999, and specifically annexure "JOB3", a schedule of shares and stocks annexed to a letter from the Public Trustee dated 4 August 1998. This schedule reveals that at the date of her death Mary Agnes Horsfall held investments in Westpac Financial Services consisting of:
"(a) Australian Bond Fund 36544.186046 units valued at $50,028.99;
(b) Moderate Growth Fund 46,138.041768 units valued at $55,227.24;
(c) Balanced Growth Fund 74,399.540962 units valued at $104,233.76."
7 In addition, the deceased held Australian Guarantee Corporation debenture stock:
| (A) | Certificate 17318777 | @ 6.35 per cent | Due 2 December 1998 | Valued at $215,000 | Interest to date of death $2,655.69 |
| (B) | Certificate 37213786 | @ 8.57 per cent now @ 5.1 per cent | Due 18 April 1998 Due 19 April 2000 | Valued at $398,091.74 | Interest to date of death $30,658.08 |
| (C) | Certificate 37275154 | 8 per cent | Due 13 August 1998 | Capital amount $177,000 | Interest to date of death $8,185.64 |
(Page 6)
9 The deceased had other significant assets at the date of her death.
10 The first question that falls for consideration is whether the investments in the Westpac Australian Bond Fund unit trusts and the Australian Guarantee Corporation Ltd income bonds come within bequest (b) in the will. In other words, do those assets fall within the description of "all my shares and stock in all companies together with any dividends accrued or accruing thereon at my death".
11 If those assets do come within that bequest, they pass to the beneficiary Odna Borlaug, the third respondent. If they do not, they form part of the residue of the estate which was bequeathed to the University of Western Australia upon trust for the use and benefit of the Faculty of Medicine.
12 Dealing generally with the construction of wills, it is necessary to turn to the general principles by which wills are to be construed. In that respect, Dixon J as he then was, said in Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 404 at 414:
"But, to determine the meaning of the will, the language of the testator must be read in the sense which he himself appears to have attached to the expressions he used, that is, unless a rule of law gives them some fixed operation. 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 that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared. That is the rule of interpretation expressed in the well known passage in the judgment delivered in the Privy Council by Lord Kingston in Towns v Wentworth (1858) 11 More PC 526 at 543, further, the court may take into account the circumstances to which the will is to be applied as they existed at the time it was executed."
13 In the Matter of the Will of Arntd [1990] WAR 5, Nicholson J set out the English approach to the same problem at 8:
"The English authorities are well reviewed in Re Allsop, deceased [1968] 1 Ch 39 and particularly in the judgment of Davies LJ. Lord Denning MR said (at 47):
(Page 7)
- 'You must look at the will in the light of the surrounding circumstances. Eschewing technical rules and literal interpretation, you must look to see simply what the testator intended. If you find that a literal interpretation gives rise to a capricious result which you are satisfied the testator can never have intended, then you should reject that interpretation and seek for a sensible interpretation which does accord with his intention. It is sometimes said that a testator can be capricious if he likes. Yes, if you are sure he intended to be. But you should not impute capriciousness to him merely to justify yourself in giving the words a literal interpretation …'"
14 Nicholson J went on to say that the focus of the court should be upon the intention of the deceased.
15 In relation to the words under consideration in the bequest presently being discussed, the words "stocks and shares" have occasioned the courts some difficulty. In re O'Connor [1970] NI 159, Gibson J said at 164:
"The phrase 'Stocks and Shares' when used in a will ought prima facie to be construed as applicable only to stocks and shares in limited companies. In re Everett [1944] Ch 176. If the phrase is to be given a more extended or different meaning this must appear from the will, either because it does not permit the ordinary meaning or because that meaning is shown to be too narrow in the context. Here it cannot be said that the phrase is incapable of being given its ordinary meaning, because the estate comprises nearly £22,000 worth of stocks and shares properly so called; but it is said that the phrase includes the testator's holdings in unit trusts and Defence Bonds even though the residuary clause is admittedly wide enough to comprehend them. The only pointer in this direction is the repeated exclusion of the Savings Certificates after the reference to the 'investments'. I cannot, however, think that on any ordinary view Savings Certificates could be regards as stocks or shares. They have none of the qualities which distinguish stocks and shares from other forms of investment. I prefer to regard the reference in this part of the will to the Savings Certificates as merely intended to reaffirm that they had already been disposed of."
(Page 8)
16 The English cases reveal two authorities which on their face appear to be conflicting. In re Everett [1944] 1 Ch 176, Cohen J said at 178-179:
"If I had to construe the will apart from authority, I would conclude, on finding the word 'stocks' with the word 'shares', that the meaning of the words was stocks and shares of a limited company."
17 Cohen J went on to say at 179:
" I cannot think that a testatrix who had bequeathed substantial specific pecuniary legacies could have intended to bequeath all her investments to the legatees of the stocks and shares. … I base my decision on the ground that the natural meaning of 'stocks and shares' is stocks and shares in limited companies, and the only use that I make of circumstances in the present case is to come to the conclusion that I find nothing in them to extend that natural meaning."
18 A contrary conclusion was reached in the matter of In re Purnchard's Will Trusts. Public Trustee v Pelly [1948] 1 Ch 312 per Jenkins J at 315:
"Looking at the will in the light of these facts regarding the composition of the testator's estate I am I think, justified in inferring that the testator, having given his wife a life interest in all his possessions, intended to make a complete disposition of those same possessions after her death, and conceived that he would be doing so if he gave his freehold property and its contents and leasehold property to his brother-in-law, and gave all his stocks and shares to the hospital. It is true that in so viewing the position he would have been overlooking the probable inclusion in his estate at his death of a certain amount of cash at the bank and elsewhere, though conceivably he may have assumed that such an amount would not be more than sufficient to pay his funeral and testamentary expenses and debts. I do not regard this omission as displacing the inference I have drawn regarding his intention to dispose of the whole of his possessions after his wife's death, and his belief that he would be doing so by the language which he used. Moreover, apart from the omission to which I have referred, that belief was well-founded, except in so far as the gift of 'all my stocks and shares' may be found, on examination of that meaning of that
(Page 9)
- expression, to be incapable of passing all of the investments specified in the schedule to the originating summons. Of course if a testator uses language which on its true construction necessarily falls short of his intention, then his intention must pro tanto be defeated. But it is equally clear that if his intention can be collected from the will as a whole, particular expressions must be construed so as to give effect to it so far as it is possible to achieve that result without doing violence to the language used."
19 In Purnchard's case, the construction of the will favoured by Jenkins J avoided a partial intestacy. Accordingly his Honour was prepared to give the term "all my shares and stock" a wide meaning in the circumstances of that will. In so doing, his Honour appears to have been construing the intention of the testator in such a way that the partial intestacy would be avoided.
20 It is significant that the same problem does not arise here. There is a residuary bequest as outlined earlier in these reasons and to construe the bequest presently under consideration in a narrow way would not create a partial intestacy.
21 In my opinion in construing this will it is significant that the deceased used not only the words "shares and stock in all companies" but also added "any dividends accrued or accruing thereon". The investments under consideration, particularly the investments in Australian Guarantee Corporation Limited which are expressed to be certificates of debenture stock, may arguably have fallen within the bequest insofar as it refers to "stock". In my view, however, the reference by the deceased to "dividends" reveals an intention by the deceased to exclude interest bearing investments from the bequest. Both that investment and the investment in the Westpac Growth Funds do not attract dividends but interest, and in my opinion the ordinary rules of construction would require the court to construe that clause in such a manner as to exclude those investments from the bequest.
22 As I have said, the deceased had a significant investment portfolio in listed companies which attracted dividend payments. The investments presently the subject of consideration were not the subject of any dividend payments but interest payments as shown on the security certificates. In my opinion, therefore, the intention of the deceased was to exclude those investments from bequest (b) in the will.
(Page 10)
23 In the end result, therefore, the Australian Guarantee Corporation Limited and Westpac investments should fall into the residuary estate of the deceased, which is bequeathed to the University of Western Australia upon trust for the use and benefit of the Faculty of Medicine.
24 I turn to the first issue set out earlier in these reasons.
25 In order to understand how that issue arises, it is necessary to refer to some of the evidence relating to, and history surrounding this application.
26 It is common ground that the second respondent Peter Graham South ("South") was the deceased's next door neighbour. He resided at 24 Gibney Street, Cottesloe and the deceased at 28 Gibney Street, Cottesloe. Between the two lots of land was a vacant block known as 26 Gibney Street, Cottesloe. The evidence indicates that at one time that lot had been used as a tennis court.
27 South was obviously a good friend of the deceased and he indicated to her that he would like to extend the house which he occupied at No 24, but to do so would cause an encroachment onto No 26. At the same time, the deceased's house, situated on No 28 Gibney Street, encroached marginally into the vacant land at No 26.
28 During her lifetime, the deceased and South discussed the vacant lot and South's plans for the extension of his house. On 5 July 1989, South prepared a contract of sale for the sale by the deceased of part of No 26, showing a purchase price of $20,000. The proposal was that No 26 would be divided equally and half attached to No 24 (which already belonged to South) with the balance being attached to No 28.
29 It is common ground that the price of $20,000 was not only less than the true market price of the land but very considerably below market value.
30 Stephen William Potter, a partner in the firm of Potter Roberts Cook Real Estate, who testified that he was familiar with the value of properties in the Cottesloe area at the relevant time put the true value of half of No 26 as in the region of $110,000.
31 It appears that the deceased was not particularly concerned about the price to be paid for half of No 26 but ultimately she asked for an increase in price from $20,000 to $25,000 to which South agreed. South amended the documentation and eventually a document was executed on 30 November 1989, showing the purchase price as $25,000. It is common
(Page 11)
- ground that the proposal to subdivide No 26 and amalgamate the discrete portions of it with Nos 24 and 28, required the approval of the State Planning Commission. At that time at least, it was also arguable that a contract for the sale of land which was subject to the approval under the Town Planning and Development Act was not enforceable. It was not certain whether the sale, subdivision and amalgamation would ultimately be concluded.
32 On 18 January 1990 and before finalisation of the subdivision and amalgamation, the deceased made her last will to which I have referred. At that time, in my opinion, the deceased was concerned that South should obtain the land necessary for him to complete the proposed extensions to his house. If the subdivision and amalgamation came to fruition, that end would have been achieved. On the other hand, if the subdivision and amalgamation was not finalised because some necessary approval was not forthcoming, the will would have the effect of enabling South to acquire No 26 so as to enable him to complete his redevelopment.
33 On 27 April 1990, the proposed plan of subdivision was registered and Lots 75 and 76 on Diagram 77925 were issued after having been approved by the State Planning Commission on 14 April 1990.
34 On 2 July 1990, after the plan had been registered, the transfers were registered and applications for new titles submitted. On 9 July 1990 two new certificates of title for Lots 76 and 75 issued. Lot 76 replaced the old No 28 plus part of No 26 and No 24 and the balance of No 26 became Lot 75.
35 The deceased died on 12 March 1998, that is after the new Lots 75 and 76 came into existence and at a time when the old No 26 had ceased to exist by reason of it having been divided in half and each half attached to its adjoining lot. It should be noted as well that, at that time the deceased's house no longer encroached into the old No 26 by reason of half of that lot having become attached to the former No 28.
36 In those factual circumstances, the question arises as to whether the bequest in the will of 26 Gibney Street, has been adeemed by those circumstances.
37 In Brown v Heffer (1967) 116 CLR 344, Barwick CJ, McTiernan, Kitto and Owen JJ said at 348:
(Page 12)
- "Ademption of a specific gift by will occurs where the property the subject of the gift is at the testator's death no longer his to dispose of: Stanley v Potter (1789) 2 Cox 180 [30 ER 83]. An obvious case of ademption is that in which the testator has completely divested himself of the property in his lifetime so that at his death there is in his estate nothing which even substantially (see McBride v Hudson (1962) 107 CLR 604) answers the words of gift. But ademption occurs also where the property has been so dealt with that by the rules of equity it must be considered at the death as having been converted into other property, such as money, which the words of gift are not apt to comprehend. Thus, in the case of a simple devise of land, if it is found at the testator's death that after making the will he became bound by a contract to convey or transfer the land to another, and the contract is still subsisting, so that when he died he was, in the sense of Lysaght v Edwards (1876) 2 Ch D 499, a trustee of the land for the purchaser and entitled only to money in its place, there is no property in respect of which the words of devise are capable of taking effect: Bennett v Tankerville (Earl) (1811) 19 VES Junior JR 170."
38 In this case, however, the position is not ambiguous. At the time of the making of her will, in my view the deceased's intention was to ensure that South obtained land sufficient for him to complete the extensions which he proposed. To that end, if the proposed subdivision and amalgamation of the titles did not proceed, then South would obtain the property pursuant to the will. His plans to extend his house would have been secured. As the events transpired, the bequest in the will was not necessary. The subdivision was approved by the State Planning Commission and the amalgamations followed. In the end result the deceased sold to South half of the old No 26 so as to enable his extensions to be carried out.
39 In Fairweather v Fairweather (1944) 69 CLR 121 Rich J said at 136:
"It is well settled that if a testator gives something to a person by his will, and afterwards, in his lifetime, sells or otherwise disposes of it, the thing itself is necessarily removed from the operation of the will, and the action of the testator is a sufficient indication of intention that the donee is not to have it (In re Bridle(1879) 4 CPD 336 at 341). Furthermore, the donee is not entitled to receive anything which the testator may have
(Page 13)
- acquired in substitution for the thing with which he has parted, unless, of course, the will or some subsequent testamentary instrument so provides, expressly or by implication. The mere fact that the testator subsequently makes a codicil which, altering his disposition in certain other respects, contains only a general confirmation of the will, express or implied, does not indicate such an intention; because, in such a case, all that is confirmed or republished is a will from the operation of which the particular things has already been removed. This is clearly pointed out by Cottenham LC in Powys v Mansfield(1837) 3 My & Cr at 375, and by Romilly MR in Cowper v Mantell (1856) 22 Beav at 229, 230 [52 ER at 1096].
In the present case, by selling the land to the devisee, the testator both manifested and carried into effect a clear intention that the devisee was not to have it for nothing after his death, but was to have it at once, although only on the terms of paying for it. Thus, what the codicil confirms is a will containing a reference to land which at the date of the codicil and of his death no longer belonged to him."
40 Rich J went on to say in the same judgment at 139:
"'Ademption' (which is what we are concerned with) 'postulates the destruction of the subject-matter, whether by physical dealing or by operation of rules of equity, while the word "conversion" postulates only a change in its character, so that one person cannot take it, while another can'."
41 In construing a will and particularly in circumstances such as these, the court is entitled to take into account not only the events which did happen between the date of the will and the death, but also to look at events which might possibly have happened: Grey v Pearson [1857] VI HLC 61 1216 at 1235.
42 The deceased, during her lifetime, made a very substantial gift to South by transferring half of No 26 to him at less than a quarter of its true value. By that means she not only rewarded South for his friendship and neighbourliness during the course of her life, but enabled him to complete the extensions. The balance of No 26 became part of the former No 28, upon which the deceased's house was constructed so that the bequest of that portion of the old No 26 went with the deceased's bequest of her house under cl (c) of the will. It follows that the house at
(Page 14)
- 28 Gibney Street, together with half of the old No 26 was intended to pass to the first respondent by the bequest in the will.
43 In reaching this conclusion I have taken into account the views expressed by Parker J in Ex parte The Public Trustee in and for the State of Western Australia as Administrator of the Estate of Elizabeth Hartigan, unreported; SCt of WA; Library No 970736; 9 December 1997 where his Honour said at 6:
"The subject matter of a gift may cease to be part of the estate where the testator disposes of the thing altogether by selling it or giving it away during a testator's lifetime. In such cases the gift is said to adeem: Atherton & Vines, Australian Succession Law, para [13.3.13]. The principle is not however, absolute. The issue raised in the present case is the extent to which it applies if the property is sold at a time when the testatrix is not capable of managing her own affairs, nor presently of validly executing a will, and the management of her estate has by law fallen to the Public Trustee who, in that capacity, is to dispose of the property having knowledge of the provisions of the document."
44 This case has none of the complexities in Hartigan's case. There is no question of the deceased in this case having lost testamentary capacity at the time of executing her will. Indeed, on the construction of the will, which I have outlined in these reasons, the deceased, it would seem, made a wise and intelligent disposition of her property at a time, and in circumstances, where the ultimate fate of the proposed subdivision and amalgamation was not known. As I have said, her intention was primarily to ensure that South was able to complete the proposed extensions which he was anxious to achieve. Once that end was secured by way of the sale of what was then half of No 26, that purpose had been achieved. In those circumstances, it is appropriate that the bequest in the will should be adeemed.
45 I would add, finally, that as at the date of the death of the deceased, South already had legal title to half of the old No 26. The other half had been amalgamated with the former land comprising No 28. If the will was to be construed in the manner contended for by the second respondent, then the effect would be that the new Lot 76 would have to be further subdivided so that the balance of the old No 26, could be amalgamated with Lot 75. The house on what was formerly No 28 would
(Page 15)
- then once again encroach marginally upon South's land. In my opinion it is highly unlikely that the deceased intended her will to have that effect.
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