Tschirn v Australian Executor Trustees Ltd

Case [2016] SASC 149


SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeals: Civil)

TSCHIRN v AUSTRALIAN EXECUTOR TRUSTEES LIMITED

[2016] SASC 149

Judgment of The Honourable Justice Doyle

16 September 2016

SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION

The respondent and first appellant are the executors and trustees of the estate of the deceased. Until 2007, the deceased lived in a property in Erindale. Following this, for approximately two and a half years prior to her death, the deceased lived with the appellants, and the Erindale property was leased to generate rental income. The deceased’s Will contained a number of specific bequests of various items of her property, including a specific devise of the Erindale Property to the first appellant.

Whilst the respondent was investigating the estate after the deceased’s death, it discovered that in excess of $600,000 had been withdrawn from the deceased’s bank accounts in the period she had been living with the appellants. As a result of this, the respondent sought and obtained judicial advice to the effect that it was appropriate to commence proceedings against the appellants and for its costs to be paid out of the residue of the estate.

The funds that were set aside from the residue of the estate to pursue the ligation have been exhausted. The respondent brought an application seeking a declaration that on the proper construction of the Will the rental income generated from the Erindale property since the deceased’s death fell within the residue of the estate. It also sought judicial advice and directions to the effect that it is appropriate that the respondent use the rental income to fund the respondent’s costs of the proceedings. A Master of the Court made this declaration and granted the judicial advice sought.

On appeal, the appellants contended that the Master erred in finding that on the proper construction of the Will the rental income fell within the residue of the estate. Accordingly, they contended that the Court should re-exercise its discretion to give judicial advice.

Held per Doyle J, allowing the appeal:

1.       On the proper construction of the Will, the rental income from the property does not form part of the residue of the Estate.

2.       It is not appropriate to give the judicial advice and directions sought.

Administration and Probate Act 1919 (SA) s 69; Supreme Court Civil Rules 2006 (SA) r 17(2), referred to.
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66, applied.
O’Brien v McCormick [2005] NSWSC 619; Re Atkinson [1971] VR 612, discussed.

TSCHIRN v AUSTRALIAN EXECUTOR TRUSTEES LIMITED
[2016] SASC 149

Magistrates Appeal:   Civil

DOYLE J:

  1. The plaintiff is an executor and trustee of the estate of Joyce Atkinson (the deceased), who died on 1 November 2009 at the age of 95.

  2. The deceased’s Will nominated her late husband’s godson (Mr Tschirn, the first defendant) as the other…

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Tschirn v Australian Executor Trustees Ltd [2016] SASC 149
Case
[2016] SASC 149
Decision Date

CaseChat Overview and Summary

In the matter of Tschirn v Australian Executor Trustees Ltd, the deceased left a Will that included specific bequests and a residuary estate distribution. The dispute arose over the interpretation of the Will, specifically concerning the specific devise of the Erindale property and the residuary estate distribution. The appeal was heard by the court under the consent of the parties, and the appeal was against the declaratory order made by the Master.

The legal issues before the court were primarily centred around the construction and interpretation of the Will. The key question was whether the specific devise of the Erindale property to Grantley Coe Tschirn survived him or if it lapsed, and how this affected the distribution of the residuary estate. The court also had to consider whether the Master’s interpretation of the Will was correct and if the judicial advice and directions sought by the parties were appropriate.

The court analysed the terms of the Will and considered the legal principles of testamentary construction. It found that the specific devise of the Erindale property did not survive Grantley Coe Tschirn if he predeceased the deceased, and thus it lapsed. Consequently, this affected the distribution of the residuary estate. The court held that the Master's interpretation of the Will was incorrect, and thus the declaratory order made by the Master was set aside. The court declined to provide the judicial advice and directions sought by the parties, but left open the possibility of a future application for such advice.

The final orders of the court were to allow the appeal, set aside the declaration made by the Master, and decline to give the judicial advice and directions sought. The court’s decision was based on the proper construction of the Will and the legal principles of testamentary dispositions.

Orders

Orders of the court

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Background

Background to the litigation

The defendant has appealed the declaratory order made, and the judicial advice given, by the Master. While the declaratory order made by the Master was a final order, such that an appeal would ordinarily go to the Full Court, the parties have consented to me hearing the appeal under r 17(2) of the Supreme Court Civil Rules 2006 (SA). Background As mentioned, the deceased died on 1 November 2009. On 11 June 2010, probate was granted in respect of the deceased’s Will executed on 7 March 2005. The statement of assets and liabilities prepared at the time of probate disclosed an estate worth slightly in excess of $1 million. This included the Erindale property which was valued at $600,000.Terms of the Will The deceased’s Will contains a number of specific legacies or bequests of various items of her personal property. Clause 11 then contains a specific devise of the Erindale property to the first defendant. It is in the following terms:11AS to my property at 18 Lockwood Road Erindale and the balance of my furniture and effects for my late husband’s God-son GRANTLEY COE TSCHIRN as shall survive me. Clause 12 provides that as to the remainder of the deceased’s estate, her trustees are to pay her debts, funeral and testamentary expenses and any duties payable in respect of her estate without any adjustment or apportionment of such duties. It also provides for payment of pecuniary legacies of $1,000 to various named people. Clause 12 then provides for the balance remaining (the residuary estate) to be divided into six equal parts, to be held as to two parts for her goddaughter Ms Sutherland (or her children, if she did not survive the plaintiff), as to two parts for the first defendant (or his children), and as to one part each for her late husband’s nephew and niece Mr and Ms Kuseff (or their named survivors). Next, in clauses 13 and 14, the Will provides:13 I GIVE to my Trustees the following powers:-(a) TO SELL such parts of my residuary estate as my Trustees shall think fit -(b) TO RETAIN the whole or any part of my estate in the same state of investment as at the date of my death but without my Trustees being in any way responsible for any loss occasioned thereby -(c) TO INVEST any monies requiring investment in any manner in which my Trustees shall think fit with the power to vary investments and with the authority to acquire shares or securities in Australian Executor Trustees Limited or any related corporate body -(d) TO APPROPRIATE any parts of my residuary estate towards the share of any beneficiary of mine and for such purpose to fix the value of such share as my Trustees shall think fit AND TO CHARGE any such share with such sum by way of equality or adjustment as my Trustees shall think fit.14I DIRECT that no income received shall be apportioned or treated as capital and that no apportionment of the income of any part of my estate shall take place and that no rules of apportionment whether legal or equitable between capital and income shall be applicable in my estate.The 2012 application for judicial advice and directions

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In summary, and while leaving open the possibility of a future application for judicial advice and directions on further information, on the information presently available to me, I am not prepared to give the judicial advice and directions sought. Conclusion For the reasons I have set out, I allow the appeal, set aside the declaration made by the Master, and decline to give the judicial advice and directions sought. I leave open the possibility of a further or renewed application for judicial advice and directions.

Ratio Decidendi

Legal Principle Established

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