Wright v Wright
[2002] WASCA 319
•28 NOVEMBER 2002
WRIGHT & ANOR -v- WRIGHT & ANOR [2002] WASCA 319
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASCA 319 | |
| THE FULL COURT (WA) | 28/11/2002 | ||
| Case No: | FUL:46/2002 | 6 NOVEMBER 2002 | |
| Coram: | TEMPLEMAN J WHEELER J MCKECHNIE J | 6/11/02 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | NATALIE JANE WRIGHT TIMOTHY JAMES MAYNARD WRIGHT (by his next friend SHERAL GLADYS WRIGHT) MICHAEL JOHN MAYNARD WRIGHT ANGELA MARY MAYNARD WRIGHT BENNETT |
Catchwords: | Practice and procedure Appeal against decision of a Master of the Supreme Court granting summary judgment Whether the expression "all my shares" in a Will was intended to encompass option shares Turns on own facts |
Legislation: | Nil |
Case References: | Re Kidman, (Dec); Kidman & Ors v Clover & Ors [1953] SASR 28 Bray v Ford [1896] AC 44 Broadman v Phipps [1967] 2 AC 46 Chan v Zacharia (1984) 154 CLR 178 Cowan v Scargill [1985] Ch 270 General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 Green v Bestobell Industries Pty Ltd [1982] WAR 1 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 Kern Corporation Ltd v Walter Reid Trading Pty Ltd & Ors (1987) 163 CLR 164 Permanent Trustee Co Ltd v New South Wales & Ors, unreported; SCt of NSW; Library No 3445192; 21 November 1995 Phillips Fox (A Firm) v Westgold Resources NL & Ors [2000] WASCA 85 Rayner v Preston (1881) 18 Ch D 1 Stern & Anor v McArthur & Anor (1988) 165 CLR 489 Stuart v Kingston (1924) 34 CLR 394 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : WRIGHT & ANOR -v- WRIGHT & ANOR [2002] WASCA 319 CORAM : TEMPLEMAN J
- WHEELER J
MCKECHNIE J
- TIMOTHY JAMES MAYNARD WRIGHT (by his next friend SHERAL GLADYS WRIGHT)
Appellants (Plaintiffs)
AND
MICHAEL JOHN MAYNARD WRIGHT
ANGELA MARY MAYNARD WRIGHT BENNETT
Respondents (Defendants)
Catchwords:
Practice and procedure - Appeal against decision of a Master of the Supreme Court granting summary judgment - Whether the expression "all my shares" in a Will was intended to encompass option shares - Turns on own facts
(Page 2)
Legislation:
Nil
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Appellants (Plaintiffs) : Mr J W K Burnside QC & Mr P G Clifford
Respondents (Defendants) : Mr M J McCusker QC & Mr I R Freeman
Solicitors:
Appellants (Plaintiffs) : Haydn Robinson
Respondents (Defendants) : Phillips Fox
Case(s) referred to in judgment(s):
Re Kidman, (Dec); Kidman & Ors v Clover & Ors [1953] SASR 28
Case(s) also cited:
Bray v Ford [1896] AC 44
Broadman v Phipps [1967] 2 AC 46
Chan v Zacharia (1984) 154 CLR 178
Cowan v Scargill [1985] Ch 270
General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125
Green v Bestobell Industries Pty Ltd [1982] WAR 1
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342
Kern Corporation Ltd v Walter Reid Trading Pty Ltd & Ors (1987) 163 CLR 164
(Page 3)
Permanent Trustee Co Ltd v New South Wales & Ors, unreported; SCt of NSW; Library No 3445192; 21 November 1995
Phillips Fox (A Firm) v Westgold Resources NL & Ors [2000] WASCA 85
Rayner v Preston (1881) 18 Ch D 1
Stern & Anor v McArthur & Anor (1988) 165 CLR 489
Stuart v Kingston (1924) 34 CLR 394
(Page 4)
1 TEMPLEMAN J: This is an appeal from a decision of a Master of the court on a defendant's application for summary judgment. The action arose out of the will of the late Ernest Archibald Maynard Wright who was commonly known as Peter Wright.
2 The essential facts underlying the dispute are set out in the judgment of the Master in which he summarised the action in this way:
"The plaintiffs are the children of Julian David Maynard Wright and Julian, as I will call him, was one of the children of Peter Wright, the other two children being Michael and Angela. The defendants are Michael and Angela."
3 The Master referred to the fact that in June 1956 Wright Prospecting Pty Ltd ("WPPL") was incorporated. WPPL is a company which enjoys a royalty stream from iron ore mining operations which arose out of the business association between Mr Peter Wright and the late Lang Hancock. As a consequence of those developments, WPPL has a royalty stream of some $8,000,000 per annum. As the Master said, WPPL is a company of some substance and its shares have a significant value. That evidence was uncontroversial.
4 Michael and Angela, as I will refer to them, became directors of WPPL in 1962 and 1976 respectively. As at June 1983 each of Julian, Michael and Angela had precisely the same shareholding in WPPL and their father, Peter Wright, was the owner of one life governor's share but had no other shareholding in the company.
5 In June 1983 under an agreement which is described as the first agreement, Julian granted to his father Peter Wright an option to buy his shares in WPPL for an exercise price of $1,070,200. It was allegedly a term of that agreement that in the event of Peter Wright's death the defendants, Michael and Angela, would honour the contractual obligations and abide by the terms of the agreement. To reflect that agreement, Michael and Angela both signed that document.
6 It was then alleged that pursuant to that first agreement, Peter Wright made certain payments to Julian apparently in exercise of the option. However there was a second option agreement between Julian and Peter Wright. It also involved an exercise price of $1,070,200. It was a term of that agreement that in the event of Peter Wright's death before payment of the final instalment of the purchase price for Julian's shares, the defendants agreed to fulfil all Peter Wright's obligations to Julian.
(Page 5)
7 It was alleged in the plaintiffs' statement of claim that in July 1985 Peter Wright exercised his option to purchase Julian's shares. It is not pleaded, though the Master noted, to which two agreements the option was exercised but for the purposes of the application that did not matter.
8 The plaintiffs went on to plead in their statement of claim that in those circumstances - that is, the option having been exercised and some payment having been made - Julian's shares became the property of Peter Wright at the time of the first agreement and the second agreement was, in effect, to deal further with Julian's shares.
9 The next point is that Peter Wright made a will on 13 December 1984 - that is, after the first option agreement but before the second option agreement - in which he appointed Julian, Michael and Angela as executors and trustees of his estate.
10 It was common ground that Peter Wright died on 13 September 1985 and that subsequently Julian relinquished to Michael and Angela the trust conferred on him by the will. Thereafter Michael and Angela continued as executors and trustees of the will.
11 The will in cl 3 contained the following provision:
"I give, devise and bequeath all my shares in the capital of the company known as Wright Prospecting Pty Ltd free from all funeral, testamentary and administrative expenses to be divided as follows:
(a) a one-third shares to my son, Michael John Maynard Wright
(b) a one-third share to my daughter Angela Mary Maynard Bennett and
(c) the balance to my said son Michael John Maynard and my said daughter Angela Mary Maynard Wright upon trust for such of the lineal issue of my said son Julian David Maynard Wright as shall survive me and attain the age of 21 years and if more than one as tenants in common in equal shares."
12 The question which the Master was called upon to determine initially was whether the shares which were the subject of the option agreement, whichever option agreement had been exercised, fell within the
(Page 6)
- expression "all my shares" in clause 3 of the will. That question arose because in the events which have happened, Michael and Angela themselves purchased the shares from Julian for a sum in excess of $6,000,000 and I will turn in a moment to the significance of that fact.
13 Focusing on the question of construction of the will, the Master said that in his view the application could be resolved simply. He said that to succeed in their claim, the plaintiffs had to establish that as at the date of the death of Peter Wright, Julian's shares were encompassed within the expression "my shares" in cl 3 of the will. If they were not so included, then they did not form part of the trust property and none of the relief claimed was available. I will come in a moment to the question of relief.
14 The Master went on to say that if the trustees had caused the estate to complete the purchase of the shares under the option agreement, then the shares, if not included in the expression "my shares" would fall into residue and be dealt with under another provision of the will. The Master then expressed the view that the expression "my shares" in cl 3 of the will did not include the option shares, as I will call them.
15 The Master said that in ordinary common parlance the expression "my shares" must be taken to mean shares of which I stand possessed. The Master went on to say that if, before his death, Peter Wright had paid to Julian any amounts due for purchase of the shares pursuant to either the first agreement or the second agreement, such as would have entitled him to those shares, and even if all the formalities of transfer had not been completed, there could be no doubt that the shares would fall within the ambit of the expression "my shares". But the evidence disclosed, as the Master pointed out, that at the date of Peter Wright's death only one instalment of 10 had been made, an instalment of $170,200, that being 10 per cent of the option price.
16 The shares remained registered in Julian's name and pursuant to the option agreement, Peter Wright was not entitled to become the registered holder of the shares until all instalment options for the shares had been made. Taken together, the Master said, all those facts lead to the conclusion that the expression "my shares" could not at the date of Peter Wright's death include Julian's shares.
17 The Master then went on to say that it was not to be doubted that as at the date of his death, Peter Wright had certain equitable rights which could have been protected by injunction. For instance, the Master said, if it had come to his attention that Julian intended to sell his shareholding,
(Page 7)
- then undoubtedly Peter Wright could have acted to enforce the implied negative covenant that Julian would not, during the currency of the first agreement or the second agreement, dispose of his shares. But that does not equate with ownership of the shares on the part of Peter Wright.
18 The Master went on to say that it was clear from the terms of both agreements that ownership of the shares passed when payment was made by Peter Wright or his estate to Julian and that unless and until that was done the shares remained Julian's property. They were not the property of Peter Wright and for that reason, in the Master's view, the plaintiff did not have an arguable case and the defendants were entitled to summary judgment.
19 With all respect to the Master, I find myself unable to agree with the conclusion which he reached. In my view the question is not whether the option shares were the legal or even beneficial property of Peter Wright at the date of his death. The appropriate question is whether the expression "all my shares" in the will was intended by the testator, Peter Wright, at his death to encompass the option shares. In my view it is, at the very least, arguable that they do.
20 Indeed it seems to me, with respect, that the Master's view, which in my opinion is correct, that Peter Wright had equitable rights which could have been protected by injunction once he had exercised the option agreement is somewhat inconsistent with his earlier expressed view that the expression "my shares" could not include the option shares.
21 It seems to me that once it is accepted, as I think it must be, at least arguably, that Peter Wright had an equitable interest in the shares in the circumstances to which I have referred, he would have been perfectly within his rights to describe them as "my shares." It was only a matter of paying the purchase price and completing the formalities in order to vest in him a legal title. But it seems to me that cl 3 and the expression "all my shares" must be construed in the circumstances as they were known to the testator at the date of his death. The fact that he had exercised the option and paid part of the purchase price is one of those circumstances. The fact that the will was executed after the first option agreement had been entered into so that the exercise of the option was clearly within the contemplation of the testator when he made his will, is another important factor.
22 It is submitted by Mr McCusker QC on behalf of the defendants that it is beyond argument, as he put it, that the expression "my shares" cannot
(Page 8)
- apply to shares subject only to the exercise option when the whole price has not been paid and when the only interest which the estate had at the time was that under an executory contract. But, as I have said, in my view there was a greater interest than that. Even if that were not so, even if there were only an interest under an executory contract which gave rise to no equitable interest, it still seems to me in all the circumstances that it would be arguable that the expression "my shares" includes the option shares.
23 The ultimate question in the action is whether the defendants hold those shares, having acquired them directly from Julian, upon the trusts of the will. That is a question which the Master addressed but it's not necessary for this court to embark upon that issue because it's conceded. Mr McCusker QC concedes, in my view very properly, that if the court is against him on the first question, the question of construction of the expression "all my shares," then the second issue is sufficiently arguable to justify the summary judgment decision being set aside.
24 Mr McCusker QC, I should say, relied on a decision of the Supreme Court of South Australia, Re Kidman, (Dec); Kidman & Ors v Clover & Ors [1953] SASR 28, in which the expression "all my shares" was construed not to include particular shares which were part of the testatrix's husband's residuary estate to which she was entitled, when those shares had not been distributed. In my view that case is of little, indeed of no assistance, because it deals with a particular set of circumstances which are quite different from the present case and in which the draftsman of the will adopted particular expressions to deal with particular parcels of shares. That is quite a different case from the present.
25 Mr McCusker QC submits that because Peter Wright's will was legally drawn and because the draftsman was well aware of the existence of the option agreement, it necessarily follows that had the testator intended the expression "my shares" to include the option shares, then the draftsman would have included some provision to cover the situation which arose, namely the exercise of the option followed by the death of Peter Wright before the option payment had been made. Of course it would have been open to the draftsman to cover that possibility. Had he done so, then perhaps we should not have been here but he didn't do so and, despite that, in all the circumstances, as I have referred to them, I remain of the view that it is sufficiently arguable that "all my shares" includes the option shares. Having reached the conclusion that the issue is sufficiently arguable, with respect, the learned Master was wrong to grant summary judgment and his order should be set aside.
(Page 9)
26 WHEELER J: In my view the Master's error in this case is to be found in par 16 of his reasons. There it appears to me that he starts from the proposition that in ordinary common parlance the expression "my shares" must be taken to mean shares of which I stand possessed and, from that, appears to proceed directly to the conclusion that the expression in the will must necessarily be understood in that ordinary, common meaning as the Master found it.
27 He may well be correct about the ordinary common parlance. However for the reasons which have been given by Templeman J, it seems to me that it is arguable in this case that the expression "my shares" in cl 3 of the will may have a broader meaning and may be taken to refer also to shares in which the testator has an interest under the option agreement to which reference has been made.
28 I would agree with the reasons of Templeman J and would allow the appeal.
29 MCKECHNIE J: I would also agree for the reasons expressed both by Templeman J and by Wheeler J. Once the Master found at par 17 that Peter Wright had certain equitable rights which could have been protected by injunction, in my view it raised an arguable claim which should have been allowed to go to trial.
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