Thomas v Pearman - [2017] WASC 209

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: THOMAS -v- PEARMAN [2017] WASC 209

CORAM: MASTER SANDERSON

HEARD: 9 MAY 2017

DELIVERED : 9 MAY 2017

PUBLISHED : 28 JULY 2017

FILE NO/S: CIV 2072 of 2016

MATTER :The construction of the Will of the late James Frederick Rowlands late of 19 Ewing Street, Augusta in the State of Western Australia
Section 77, s 90 and s 92 of the Trustees Act 1962 (WA) and O 58 of the Rules of the Supreme Court 1971 (WA)

BETWEEN: ALAN JEFFERY THOMAS
Plaintiff
AND
ANDRIA MARIA PEARMAN as Executor of the Will of JAMES FREDERICK ROWLANDS
First Defendant
DEREK HOWARD THOMAS
Second Defendant
VESTA ROWLANDS
Third Defendant
KEVIN REES ROWLANDS
Fourth Defendant
YVONNE ANNE FERGUSON
Fifth Defendant
GWENNETH BULMAN
Sixth Defendant

Catchwords:

Wills and probate - Proper interpretation of home made will - Turns on own facts

Legislation:

Wills Act 1970 (WA)

Result:

Directions give

Category: B

Representation:

Counsel:

Plaintiff:     Ms W F Gillan
First Defendant              :     Mr J G Young
Second Defendant         :     No appearance
Third Defendant            :     No appearance
Fourth Defendant           :     No appearance
Fifth Defendant              :     No appearance
Sixth Defendant             :     No appearance

Solicitors:

Plaintiff:     Havilah Legal
First Defendant              :     Lane Buck & Higgins
Second Defendant         :     No appearance
Third Defendant            :     No appearance
Fourth Defendant           :     No appearance
Fifth Defendant              :     No appearance
Sixth Defendant             :     No appearance

Case(s) referred to in judgment(s):

Cox v Archer (1964) 110 CLR 1
Kenna v Conolly (1983) 60 CLR 583
Saunders v Vautier [1841] EWHC J82

MASTER SANDERSON: This was the plaintiff's application seeking directions as to the proper interpretation of the will of the late James Frederick Rowlands (the deceased). Probate of the will was granted on 21 April 2015. The documents which were admitted to probate are the will itself with certain attachments to the will which it is clear are themselves incorporated into the will. There is also a codicil which was drawn on 13 December 2012. The will and the codicil were home made. They comprise 14 pages in all. They are a particularly egregious example of the folly of home made wills.
The will is not well punctuated and paragraphs within the will are not formally numbered. The pages of the will are numbered. Counsel for the plaintiff in an attempt to impose some form of order on the document gave numbers to each separate paragraph on each page of the will and codicil. So for instance the first paragraph on the first page of the will was designated par 1/1; the eighth paragraph on the same page was designated par 1/8; and the first paragraph on page 6 of the will was designated par 6/1. Numbers were not assigned to the paragraph headings. This was a very sensible approach and it was supported by counsel for the first defendant. It is the approach that I have adopted in these reasons.
The main body of the will appoints the first defendant as executor and presumably as trustee of the estate to carry out the executor's instructions with respect to the estate (par 1/2). There is no express reference to the executor being the trustee but the proper construction of this paragraph when read with the instructions contained in the will makes it clear that a trust is effected. I will have more to say on this issue below.
Paragraph 1/4 through to par 1/7 contain provisions relevant if the testator's wife survived him. That did not occur. Apart from observing that had the testator's wife survived him it is likely the whole of the special provisions would have created a trust solely for his wife; these provisions can be ignored.
Paragraph 1/8 gives non‑binding directions to the executor to become a 'signatore' [sic] of certain joint bank accounts of the testator and his wife.
The six paragraphs on page 2 deal with the deceased's funeral arrangements. For instance, it nominates a funeral director, it specifies where the funds for the funeral are to come from and it directs the executor to dispose of the deceased's ashes. None of this is relevant to the present matters at issue between the parties.
That is the extent of what the deceased expressed to be his last will and testament. However, at par 1/2 he makes reference to 'instructions' in an annexure to the will. The annexure consists of a number of different sections. There is an introductory page (page 3) which refers to instructions subsequently contained in the annexure but does not provide any gift of the estate.
Section A has a subheading 'Bank Accounts'. It comprises eight paragraphs. Paragraph 1 refers to bank accounts held in the names of the deceased and his deceased wife. Paragraph 2 directs all monies held either in joint names or single entity accounts are to be deposited in one account. By par 3 the executor is to be the 'sole signatore' [sic] of the amalgamated accounts. The directions are not of a testamentary nature. They do not affect the disposition of the money in the bank accounts and are in the nature of non‑binding wishes as to the mechanism of how the executor is to get in these assets of the estate.
By par 4 the executor is required to give to each of the plaintiff and the second defendant and account on an annual basis. This is the first paragraph in which the plaintiff and the second defendant are described as 'beneficiaries'.
By par 5 the executor is directed three months after the death of both the deceased and his wife to make a 'minimum payment' of $15,000 to each of the 'beneficiaries'. By par 6 at the end of each financial year 'thereafter' a minimum payment of $15,000 is to be made to both beneficiaries. By par 7 the amount of the yearly payment is to be reviewed and 'increased as per funds available'. Paragraph 8 details the bank accounts which are presumably covered by Section A.
It is contended by the plaintiff that the proper construction of these provisions is that they give effect to a trust over all of the money owned by the deceased and held in bank accounts for the benefit of the beneficiaries. For reasons detailed below the plaintiff says that although the trust envisages certain yearly payments the words are in effect a gift of those funds solely to the beneficiaries.
Page 5 deals with 'Section B' which has the subheading 'Shares and Investments'. Paragraph 1 provides that certain nominated shares and investments owned by the deceased are to be 'deposited into the Bendigo Super Account'. Shares cannot be deposited into a bank account and it is the plaintiff's contention the proper construction of the provision, when read with the preceding page, Section A, is that the executor is directed to sell the shares and the cash is gifted in the same way the cash assets of the estate have been gifted.
Page 6 contains 'Section C' which has the subheading 'Property: 19 Ewing Street, Augusta, Western Australia'. By par 1 there is an express direction for the sale of the Augusta property; certain non‑binding directions are given with respect to the sale and the executor is directed (by par 4) to pay all of the proceeds into the Bendigo Super Account. Again it is the plaintiff's contention the proceeds of the sale form part of the gift of cash assets as is the case with Sections A and B.
(There are some unusual 'special conditions' in par 5 of Section C. For instance, there is a specification that:
At no time are the beneficiaries respective spouses - partners to enter the property.
Nothing turns on these directions and they are clearly non‑binding. I mention them for the sake of completeness.)
Counsel for the plaintiff made the point in her written submissions that a trust for sale with no special power of postponement means the property must be sold 'within a reasonable period of time'. Reference was made to the High Court decision in Cox v Archer (1964) 110 CLR 1, 7. That point of principle can be accepted.
Page 7 deals with what is presumably Section D. In contrast to the other sections page 7 contains the letter 'D' but does not contain the heading 'Section D'. Nothing appears to turn on this omission. The subheading in the section is 'Property at: Lot 42, South West Highway, Boyanup'. Two options are provided to the executor. First, there be a sale of the property by the executor with a direction that the proceeds of sale are to be 'deposited into the Bendigo Super Account'. Once again the plaintiff maintains the realised funds are to be dealt with as cash assets. This is covered in pars 1 ‑ 3.
The second option for the Boyanup property is what in a subheading is described as 'Continuing Investment Property'. This provides an option to the executor to retain the property as an investment in which case the property is to be leased and there is a direction that the income from the lease is to be 'deposited into the Bendigo Super Account'. There is no temporal limitation on retention of the property but it is to be implied that it should not be indefinite. Under the second option the executor is obliged to provide an account to the beneficiaries of 'all rental deposits and outgoings'. It is the plaintiff's position the disposition makes plain if the property is retained and leased for a period the beneficial owners of the property are the beneficiaries. Further, the plaintiff submits in the event of either option the proper construction is that the will effects gift of the Boyanup property to the plaintiff and the second defendant. The plaintiff relies on the principle that an express gift of income without limitation as to time and without any disposition of the corpus of the gift whether real estate or other property is usually construed as a gift of the corpus to the donee absolutely. As a consequence the beneficiaries may claim the corpus and put an end to the trusts.
Page 8 and Section E deal with 'Vehicle/s'. There appears at par 1 a direction for the sale of any vehicles. There is no express direction as to what should be done with the proceeds of the sale of any vehicles. The plaintiff submits the only beneficiaries referred to in the will are the plaintiff and the second defendant and as with all other items of property it is implicit the proceeds should be paid into a bank account. The funds from the sale of the motor vehicles should then be dealt with in the same way as all other cash assets.
Page 9 deals with Section F and has the subheading 'Personal Property to Beneficiaries'. Reference is made to two lists which are said to cover the property and to be attached to the will. In fact there appears to be no lists. It would appear then that the beneficiaries are entitled jointly to the property which falls within this general description.
Page 10 deals with Section G and has the subheading 'Goods and Chattels to be Sold'. There is an express direction for the sale of goods and chattels and a direction that the proceeds of sale are to be paid into 'the Bendigo Super Account'. Once again it is the plaintiff's contention the resulting cash should be dealt with in the same way as all other cash assets.
Section H on page 11 has the subheading 'Pets'. The intention of the deceased appears to be that he has gifted the pets (and Bill the parrot's aviary) to the executor. The executor is, pursuant to this provision, entitled to an indemnity for caring for the pets out of the assets of the estate.
Page 12 is a letter from the deceased to the branch manager of his bank in Augusta. It is of no significance. Page 13 is a letter directed from the deceased and his wife to the plaintiff and the second defendant. By par 6 it does say a 'yearly deposit will be made into each of their accounts'. Otherwise it takes the matter no further.
That then leaves the codicil. The codicil appears to be directed as preventing any beneficiary from taking action to challenge the will. It purports to remove the right of a beneficiary should any proceedings be issued. Apart from noting there is reference to the plaintiff and the second defendant being beneficiaries in par 3 of the codicil it is of no real consequence.
It was the plaintiff's submission that on a proper construction of the will taken in its entirety it effected a trust for sale of the substantial assets of the estate of the deceased and a gift of the proceeds of the sale to the plaintiff and the second defendant. Even though the trust provides for an early distribution of part of the cash component of the estate and for yearly distributions to the beneficiaries it was the plaintiff's position that the will resulted in a bare trust for the sole benefit of each of the two nominated beneficiaries which vested at the date of the death. Further, they were entitled to possession of the assets when getting in of the estate was otherwise complete.
In support of this proposition counsel relied on a number of matters. First, the only beneficiaries of the trust are the plaintiff and the second defendant. Second, there are no words of condition to the taking of an interest. Third, there are no obvious words of divestment other than in the very limited circumstances of the codicil. Fourth, there are no obvious words requiring accumulation of a fund other than by getting in of the estate. Fifth, there are no words as to discretion regarding whether the distribution at the end of each financial year is as to income or capital. Sixth, there are no words which suggest that the beneficiaries are not ultimately entitled to the whole of the trust fund or that any class of beneficiaries other than the plaintiff or the second defendant might be so entitled. Finally, counsel relied on the presumption in favour of early vesting. There are numerous cases dealing with this issue - the High Court decision in Kenna v Conolly (1983) 60 CLR 583 being perhaps the best known.
Before turning to the submissions made on behalf of the first defendant I should set out the basic principles which govern the construction of a will. What follows is taken largely from the submissions of the plaintiff on this question. Counsel for the first defendant in his written submissions adopted these general principles. As with all of these questions of interpretation of the will it is not the principles which are difficult; it is the application of the principles where problems arise.
The object of the court in construing a will is to ascertain the intention of the testator as expressed in the will when read in the light of any admissible extrinsic evidence. In other words the question for the court is - what do these words used by the testator mean? If the words or phrases in a will are clear and unambiguous effect is given to the them irrespective of the result. However, the words of a testator who has made his or her own will may be considered 'less strictly' than in a case where the will is drawn by a skilled professional.
The court is entitled to consider the context or surrounding circumstances in which the will was made to construe the words for the purpose of ascertaining the testator's intention. This is the armchair principle of construction. The principle also extends to allowing the court to use evidence of matters known to the testator to explain ambiguous words or phrases. It does not extend to evidence of what the testator intended by his will. Unless a contrary intention appears from the will it is to be construed with reference to the property comprised in it as if it had been executed immediately before the death of the testator: s 26(a) Wills Act 1970 (WA).
Turning then to the submissions made on behalf of the first defendant counsel called into question whether the will created a valid trust. It was counsel's submission the will was 'at least equivocal' as to the testator's intention to create a trust. In making this submission counsel referred to three facts. First, the appointment of the first defendant as sole signatory of the nominated bank account giving her sole control and legal ownership in her name only and not expressing that to be as executor or trustee. Second, no words of trust are used in the will. While technical words are not required, and less precise language may be used in wills, unless an intention to create a trust is clearly to be ascertained from the language used and the circumstances taken overall a court should not be astute to discover indications of such an intention. Finally, while there are indications of an intention to create a trust there are some words which imply a continuing corpus and do not clearly point to such an intention. Counsel referred in particular to page 13 and the comments directed at the two named beneficiaries.
Further, it was counsel's submission that if the will intended to create a trust it was not a bare trust nor a fixed trust of which the plaintiff and the second defendant were the only beneficiaries. Counsel pointed first to the entitlement to payments to the beneficiaries being limited to available funds which may not be equal to income from the assets. Further the requirement for annual review and increases as per the funds available implies the maintenance of a continuing fund and does not imply an entitlement to what may be termed the corpus of the fund. Accordingly, counsel submitted the proper construction of the will if a trust was created was a trust where the entitlements of the beneficiaries were to an initial payment followed by annual payments of the amount at the discretion of the first defendant.
If that was so - that is, a trust was created and it was not a bare trust nor a fixed trust - then it would fail by reason of uncertainty of terms and objects. Counsel referred to three matters. First, no term is stated during which the trust is to continue. As payments are only to be made to the plaintiff and the second defendant it might be implied that the trust is to continue until the death of the survivor of them. Second, the terms of the will imply a continuing fund which may result in funds remaining after the entitlement to payments cease. Finally, no person is nominated as entitled to the funds after the entitlements to payments cease and no implication can be drawn that the plaintiff and the second defendant are entitled. The tenor of the will is that they are only to have an entitlement to periodic payments.
Counsel for the first defendant pointed out that if a trust fails for uncertainty of objects then it fails completely. There is no room for considering the trust may be valid for a time and then fail. If the testator intended to create a trust but the words employed by him did not give effect to that intention then there will be an intestacy save for the funds for the care of the pets.
In my view the basic structure of what was intended by the deceased is clear from the terms of the will. It was certainly never intended by the deceased the first defendant would become entitled to any of the assets of his estate. She was only to act as a trustee to ensure that the deceased's property was collected and the benefits were passed on to the plaintiff and second defendant as named beneficiaries. The deceased clearly had a poor understanding of the nature of a trust, the obligations of a trustee and how a will should be worded so that the creation of a trust was not in doubt. But given that in every way the benefits of the deceased's estate were to pass to the plaintiff and the second defendant there is in my view no doubt a bare trust was created.
In line with these reasons I gave the following directions in relation to the will of the deceased:
1.There is a trust created by the will.
2.The plaintiff and the second defendant are the sole beneficiaries of the trust created by the will.
3.The trust is solely for the benefit of the plaintiff and the second defendant as beneficiaries.
4.The whole of the assets of the estate are settled into the trust except for the pets.
5.The trust is an express trust for sale in which the plaintiff and the second defendant have an absolute, vested and indefeasible interest in the proceeds.
6.The trust is not a discretionary trust.
7.The trust is of the type subject to the rules in Saunders v Vautier [1841] EWHC J82 and if the trustee receives a direction from the plaintiff and second defendant to pay them the fund, then she should pay the whole of the fund to them except for a sum set aside for the pets.