Jacka v Stocker HC Nelson CIV-2011-442-60

[2011] NZHC 1230

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2011-442-60

UNDER  the Trustee Act 1956

IN THE MATTER OF     the will of Darcy William Nicholls, deceased

BETWEEN  BEVERLEY ANNE JACKA Applicant

ANDGARY THOMAS STOCKER, IAN JAMES TURNER AND SANDRA ANNETTE NICHOLLS AS TRUSTEES OF THE ESTATE OF DARCY WILLIAM NICHOLLS

Respondent

Hearing:         On the papers

Judgment:      22 September 2011

JUDGMENT OF CLIFFORD J

Introduction

[1]      The applicant, Mrs Beverley Jacka, is a beneficiary under the will of her late husband, Mr Darcy Nicholls.  Mrs Jacka asks for a declaration that Mr Nicholls’ will requires the respondents, the trustees of that will (“the Trustees”), to purchase and allow her to reside in an occupation unit at Oakwoods Retirement Village in Nelson (“the Oakwoods unit”) as she has requested them to.  The Trustees say that whilst Mr Nicholls’ will allows them to do that, it does not require them to.  Acting in what

they say is their discretion, they have so far declined to agree to Mrs Jacka’s request.

JACKA V STOCKER, TURNER AND NICHOLLS HC NEL CIV-2011-442-60 22 September 2011

Facts

[2]      Mrs Jacka and Mr Nicholls were married in July 1983.   It was a second marriage  for  them  both.  Mrs  Jacka’s  first  husband  had  died  in  March  1976, Mr Nicholls’ first wife in April 1982.   Following their marriage Mrs Jacka and Mr Nicholls lived in Mr Nicholls’ house at 1 Kew Place, Richmond.  They were still living there when Mr Nicholls died on 23 October 2009.

[3]      Of the Trustees, Messrs Stocker and Turner are solicitors and Ms (Sandra) Nicholls is Mr Nicholls’ daughter by his first wife.  Mr Nicholls’ estate is a modest one: it comprises the house at 1 Kew Place and approximately $50,000 in bank accounts.

[4]      The principal features of Mr Nicholls’ will are that he left Mrs Jacka a life interest in the estate, including 1 Kew Place (subject to her paying the outgoings), with a gift over to the five children of his first marriage, Sandra, Richard, Wayne, Alan and William.  Mr Nicholls’ will provided additionally:

6.    Trustees Powers

6.1I EMPOWER my trustees at the request of my said wife to sell any house property forming part of the residue of my estate and to purchase an alternative property to be held on the same trusts. I DIRECT that such alternative property may be either freehold, leasehold, cross-lease, licence to occupy or such other form as may be acceptable to my said wife.

[5]      On 3 February 2010, Mrs Jacka’s solicitors – Pitt & Moore – wrote to the Trustees’ solicitors, Messrs Stocker’s and Turner’s firm Knapps.  Mrs Jacka was not comfortable with the terms of Mr Nicholls’ will.  The life interest made Mrs Jacka feel as though she was just a tenant of Mr Nicholls’ estate.   After summarising Mrs Jacka’s concerns, Pitt & Moore summarised her legal position as follows:

Mrs Jacka’s inclination is to accept the rights under the Property (Relationship) Act option A and to have the family home vested in her and the estate as tenants in common in equal shares.

That then leaves the position as to her rights under the Family Protection Act because the Court would not consider a half share to a widow after twenty five years of marriage to be sufficient if she cannot purchase a separate property.  It is likely the Court would grant her a life interest in the estate’s half share on the same terms as in the will i.e. the right to a substitute

property.  We ask for Bev whether the family would agree to this without the necessity for an application to the Court.

If this request were granted, Bev would agree the investments in Darcy’s estate (of approximately $50,000.00 we understand) be released to his children now.

These  arrangements  if  they  were  agreed  to  would  be  dealt  with  by yourselves as solicitors for the trust.

[6]      On 16 February Pitt & Moore wrote again asking Knapps to advise the date of grant of probate, and – in the context of their earlier letter – raised the possibility of the purchase under the terms of Mr Nicholls’ will of the Oakwoods unit in place of 1 Kew Place in the following terms:

Mrs Jacka is concerned about her long term future at Kew Place and has considered the purchase of a Licence to Occupy at Oakwoods.

We note the Will of the late Mr Nicholls provided for that possibility.  We acknowledge however such an arrangement was on the basis of a life interest in the whole property at Kew Place as opposed to a life interest in only a half share which would occur if Mrs Jacka’s suggestion contained in our last letter to you is accepted.

We would be please for your instructions concerning that possibility [sic].

[7]      Knapps replied in late March, Sandra Nicholls by then having consulted her siblings.   They suggested a settlement whereby a one third share of 1 Kew Place would  be  transferred  to  Mrs Jacka  rather  than  the  one  half  share  proposed  by Mrs Jacka, with the $50,000 to be released to Mr Nicholls’ children.  In that reply the question  of  the  significance  for  the  Nicholls  children,  as  remaindermen  of Mrs Jacka’s  life  interest,  of  the  possible  purchase  of  an  occupation  unit  in  a retirement village was raised:

The  trustees  of  the  estate  would  agree  to  consider  any  approach  from [Mrs Jacka] to sell the Kew Place property and to purchase a substitute property for her independent personal occupation.  The trustees would agree to not unreasonably withhold their consent to such a transaction but would require to see (at least) valuations of both the Kew Place property and any new property before giving their consent.  The Nicholls children would not be keen to contribute estate funds to a “Licence to Occupy” in a Retirement Village with the resultant loss of capital.

[8]      The reference to a “resultant loss of capital” is a reference to the effect of a common feature of the “ownership” of units in retirement villages.   Purchasers of such units generally acquire a licence to occupy the unit granted by the owner and

operator of the village and recorded in an occupation rights agreement between the owner and the purchaser.  When the time comes to “sell” the unit, the occupation rights agreement comes to an end and the occupier is required to pay a “membership fee”, calculated as a percentage of the price originally paid for the licence. The operator of the village then repays the initial purchase price less that fee.

[9]      In an affidavit sworn in these proceedings Anissa Bain, a partner in Pitt & Moore, deposed that there were a number of retirement villages in the Nelson district and to the best of her knowledge all of them charged such a fee.  Those fees range between 20 per cent after five years’ occupation (the Ernest Rutherford), 28 per cent after, in  effect, two  years’ occupation  (the Wood), 25 per cent  after five years’ occupation (Roundhay) and 20 per cent after four years’ occupation (Kensington Court).  In the case of the Oakwoods Village, the maximum fee is 30 per cent after three years’ occupation, the fee accruing at 10 per cent per annum for the first three years.

[10]     Pitt & Moore replied to Knapps on 10 May, having discussed the position with Mrs Jacka and her family. After traversing what they considered to be the likely outcome of any court proceedings (Mrs Jacka to receive at least 75% of 1 Kew Place), they recorded Mrs Jacka’s agreement to the proposal that “one third of the net proceeds of the sale of the property she is living in at the date of her death be it Kew Place or Oakwoods Villa be paid to her estate”, but on the basis that Mr Nicholls’ will would otherwise be unchanged.  Pitt & Moore went on to clarify the effect of that proposal, including by noting that “There is a power for a substitute property to be purchased at Bev’s request, including a licence to occupy”.

[11]     By September agreement had been reached and a Deed of Settlement and Family Arrangement (“the Deed”) was entered into between Mrs Jacka, the Trustees and Mr Nicholls’ children whereby the property at 1 Kew Place was vested in the Trustees, as to a two thirds share, and Mrs Jacka, as to a one third share, as tenants in common. The Deed went on to provide:

In all other respects the provisions of the Will shall continue to apply including the Trustees’ powers pursuant to the Will to purchase a substitute property which may include, amongst other ownership forms, a licence to occupy.

[12]     In  Late  November  2010,  Mrs  Jacka  approached  the  Trustees  for  their agreement  that  1  Kew  Place  be  sold  and  the  proceeds  used  to  purchase  the Oakwoods unit, in the two thirds/one third division provided by the Deed.  Formal consent to that proposal was sought by Pitt & Moore in a letter to Knapps dated

2 December.  Knapps replied by email on 6 December.  Mr Turner emphasised the need to consult the other beneficiaries.  More particularly, Mr Turner observed that if Mrs Jacka  was  to  purchase  the  Oakwoods  unit  “then  there  will  need  to  be  an agreement on how that purchase is to be structured, in particular who is to carry the depreciation cost”.

[13]     That issue remained a point of contention.

[14]     On a number of occasions Pitt & Moore expressed the view that the Trustees were, in effect, obliged to agree to Mrs Jacka’s proposal to sell 1 Kew Place and purchase the Oakwoods unit.  That issue was linked to the execution of the Deed. Thus, in a letter of 9 December Pitt & Moore expressed the view that Mrs Jacka:

accepted the one third share on the basis she would require the executives in respect of the remaining two thirds share to purchase an occupation licence. This ability for [Mrs Jacka] to move to Oakwoods was fundamental to [her] decision to accept a lesser share in the Kew Place property.

Pitt & Moore expressed similar views in letters of 16 and 22 December.

[15]     Replying to Pitt & Moore, in an email of 10 December Knapps observed:

If your client wishes to purchase an Occupation Licence in Oakwoods, then the trustees will assist her to do so, but the trustees preference is to structure the assistance in such a way that the capital depreciation to the Estate is little, if any.

This was not, Knapps observed, “inconsistent with the will, pre-Deed of Settlement

correspondence nor the Deed of Settlement itself”.

[16]     On 17 December, Knapps expressed the view that the will gave the Trustees the power to purchase an alternative property, including a licence to occupy.  That was only a power and not a direction.  If that “discretionary power on the part of the trustees was to be converted to a binding direction, it ought to have been addressed in  the  Deed  of  Family  Arrangement  and  it  was  not”.     The  fact  that  “the

remaindermen did not favour contributing to a licence to occupy was raised in the pre-Deed of Family Arrangement correspondence”.

[17]     By late January 2011, agreement not having been reached, Pitt & Moore raised with Knapps their intention to make an application to the High Court to “require the trustees to enter into a purchase of the unit at Oakwoods in accordance with Mrs Jacka’s request and as provided for in clause 6.1 of the will”.   Further correspondence ensued, to no effect.

[18]     On 17 February these proceedings were commenced by way of interlocutory application on notice under the Trustee Act 1956 and the Family Protection Act

1955.  Mrs Jacka sought orders under the Trustee Act requiring the Trustees to enter into an agreement to purchase the Oakwoods unit or, in the alternative, seeking orders under the Family Protection Act for further and better provision for Mrs Jacka under Mr Nicholls’ will.  In a memorandum accompanying that application, Pitt & Moore noted that the matter could be dealt with on the papers, but that there was some urgency because Mrs Jacka only had the option to acquire the Oakwoods Unit until the end of March.

[19]     Mrs Jacka’s  applications  were  called  before  Justice  Ronald  Young  on

1 March  2011.    He  invited  Mr  Allan,  who  appeared  for  Mrs Jacka,  to  file  a memorandum   addressing   urgency   and   timetable.      As   matters   subsequently transpired, it was agreed – as Knapps had previously indicated the Trustees would – that 1 Kew Place would be sold and two thirds of those funds advanced interest free to  Mrs Jacka  to  enable  her  to  purchase  the  Oakwoods  unit.     Pending  the determination  of  Mrs Jacka’s  applications,  such  loan  was  interest  free  and  only repayable on her death.   Mrs Jacka subsequently purchased and moved into the Oakwoods unit on that basis.

Analysis

[20]     Whether or not the Trustees were entitled to decline Mrs Jacka’s request depends upon the proper interpretation of clause 6 of Mr Nicholls’ will.  The parties have expressed this issue in terms of whether that clause  gave the Trustees the

power, but not the duty, to comply with Mrs Jacka’s request or whether the Trustees were subject to such a duty.

[21]     The principles that apply to the interpretation of wills are well-known, and need  only be  referred  to  briefly.   As  Mr Praat,  for the Trustees,  submitted, the objective is to ascertain the intention of the testator.  The fundamental rule in Perrin v  Morgan,  referred  to  in  Nevill’s  Law  of  Trusts,  Wills  and  Administration,  is expressed as follows:[1]

... the fundamental rule when construing the language of a will is to put upon the words used the meaning which, having regard to the terms of the will, the testator intended.  The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case – what  are the “expressed intentions” of the testator.

[1] Perrin v Morgan [1943] AC 399 (HL) 406 cited in Dr N Richardson Nevill’s Law of Trusts, Wills and Administration (10th ed, LexisNexis, Wellington, 2010) at 445.

[22]     In Laws of New Zealand, that general principle is expressed in the following terms:[2]

The only principle of construction that is applicable without qualification to all wills and that overrides every other rule of construction is that the will- maker’s intention is collected by considering the whole will, taken in connection with any evidence properly admissible.  The meaning of the will and of every part of it is determined according to that intention.  (Citations removed)

[2] Laws of New Zealand Wills (online ed) at [201].

[23]     Thus, one cannot rewrite the will based on what the testator’s intentions were likely to have been.  Generally, words are to be given their ordinary meaning and if the language is unambiguous it should be given effect, even if that does not accord with the testator’s intention.[3]    This rule does not apply when words are capable of more than one meaning, in which case if a secondary meaning makes sense in the circumstances that meaning should be adopted.  It also does not apply if a word has more than one ordinary meaning, in which case the words must be construed by

[3] Nevill’s Law of Trusts, Wills and Administration, at 448-449.

looking at the will as a whole and any extrinsic evidence.   Another principle of construction is that technical words should be given their technical meaning.[4]    The dictionary  principle  means  that  if  a  testator  has  given  uncommon  meanings  to

[4] Ibid, at 450

common words (and this is obvious from the context or because a dictionary has

been provided) the words will bear the meaning the testator intended.[5]   Generally, if a word is used repeatedly there is a presumption that it is given the same meaning throughout, though this is not a universal principle and must be applied carefully.[6]

The will is to be read as a whole.[7]   Finally, the “rule of despair” means if two clauses

contradict each other the later clause prevails over the former.  However, Courts are sometimes reluctant to apply this principle if it results in undesirable outcomes such as a result that the testator clearly did not intend.[8]

[5] Ibid, at 451.

[6] Laws of New Zealand Wills (online ed), at [227].

[7] Nevill’s Law of Trusts, Wills and Administration, at 451.

[8] Ibid, at 454.

[24]     Applying  those  principles,  the  Trustees  argue  that  the  word  “empower” means just that: it gives the Trustees the power to replace 1 Kew Place with another property.  It does not require them to do so.  Given the use of the word “direct” in the second part of that clause, they argue that if Mr Nicholls had intended to impose an obligation on the Trustees to comply with any request Mrs Jacka made, he would have used a word more like “direct”.  It was, they submitted, a strong signal as to the proper interpretation of the use of the word “empower” that, in the very clause that is to be interpreted, whilst the word “empower” is used at one point (as regards the power to substitute one property for another), the word “direct” is separately used as regards the range of acceptable alternative properties.  Similarly, there is the use of the phrase “I direct” and “I further direct” in other clauses of the will.

[25]     Mrs Jacka’s  position  is,  put  simply,  that  her husband’s  clear  intention  as reflected in the words used was that if she wished to move to a retirement home on the basis of a licence to occupy, her husband directed his Trustees to comply with such a request.   There would be little point in Mr Nicholls having made express reference in clause 6.1 that the alternative property might be a licence to occupy if – by reference to the fact that the property Mrs Jacka wished the Trustees to buy was in fact a licence to occupy – they could decline her request.

[26]     In considering those competing arguments as to the proper interpretation of Mr Nicholls’ will, the starting point in my view is the general effect of its provisions taken overall.  As noted, most notably Mrs Jacka is given a “life interest”.  Clause 4

provides:

4.1I GIVE AND BEQUEATH any interest owned by me as at the date of my death in the residential property at 1 Kew Place, Richmond, Nelson, or my interest in any property purchased in substitution unto my trustees upon the following trusts:

4.2AS from my death to permit my wife  BEVERLEY ANN JACKA to personally occupy the same  subject to her paying all rates, taxes, insurance premiums and other outgoings payable in connection with such property.

4.3FROM and after the point of time when my said wife shall have ceased  to  personally  occupy  such  property  or  shall  earlier  have notified my trustees in writing that she no longer desires to have such rights (hereinafter called “the point of distribution”) I DIRECT my trustees to hold such property for my children  SANDRA ANNETTE NICHOLLS, RICHARD ROYDEN NICHOLLS, WAYNE McKENZIE NICHOLLS, ALAN DAVID NICHOLLS and WILLIAM  GRAEME  NICHOLLS  as  are  living at  the  point  of distribution.

[27]     In other words, Mrs Jacka’s “life interest” is not an interest that lasts for the

whole of her life, but one that only lasts so long as she occupies the property at

1 Kew Place personally, or a property purchased in substitution.   Once Mrs Jacka moves out of 1 Kew Place, or a property purchased in substitution, she no longer has any beneficial interest in the property and it passes to Mr Nicholls’ children.   By contrast, clause 5.2 provides for Mrs Jacka to have the use of the remainder of the estate during her lifetime.  Given Mrs Jacka’s age, the importance of clause 6.1 can be understood.  Without clause 6.1, if Mrs Jacka felt it appropriate or if it became necessary – for example for health reasons – that she move to a smaller property or a retirement  village,  then  unless  that  property  becomes  the  substitute  property Mrs Jacka’s “life interest” would come to an end and she would have to finance that move herself, subject only to support from Mr Nicholls’ estate to the extent of her life interest in the remainder.

[28]     Turning then, in that context, to the interpretation of clause 6.1, I note first that it comprises two sentences.   In the first, the Trustees are empowered, at the request of Mrs Jacka, to sell 1 Kew Place and to purchase an alternative property to be held on the same trusts.  That clause, taken alone, would not in my view impose a duty on the Trustees to do so.  Mrs Jacka could have come to the Trustees with an exchange request that it was not appropriate for the Trustees to agree to, for example, because the property which Mrs Jacka wished to buy was – for a property of its type

– clearly overvalued.   In that circumstance,  I think the Trustees could properly decline Mrs Jacka’s request. To that extent, clause 6.1 is a power.

[29]     Where I differ from the position taken by the Trustees is that, in my view, the direction  in  the  second  sentence  of  clause  6.1  affects  that  power.    The  second sentence is, in its terms, clear: Mr Nicholls directs that such alternative property may “be either freehold, leasehold, cross-lease, licence to occupy or such other form as may be acceptable to my said wife”.  In my view the effect of that direction on the power in the first sentence is that a licence to occupy is an appropriate property and that – other considerations aside – the Trustees are to agree to a request to exchange

1 Kew Place for a property to be occupied on a licence to occupy basis.  In other words, the second sentence in clause 6.1 evidences an intention by Mr Nicholls that Mrs Jacka may ask the Trustees to exercise the power to substitute 1 Kew Place for a property such as the Oakwoods unit which she was to occupy on a “licence to occupy” basis.   In directing that such property may be a licence to occupy if acceptable to Mrs Jacka, Mr Nicholls was directing the Trustees to accede to such a request from Mrs Jacka, all other things being equal.  I do not think the Trustees can therefore decline such a request because of a feature of the occupation agreement for the Oakwoods unit – the membership fee – given that such a fee is a common feature of such agreements.

[30]     In other words, and much as Mr Praat put it in his written submissions:

The expressed intention here is that the Trustees’ power in purchasing a property in substitution is not constrained by considerations of whether the proposed alternative property is freehold, leasehold, cross-lease, Licence to Occupy or indeed any other estate in land as long as it is acceptable to the Applicant.

[31]     Mr Praat went on to submit that it was clear that the Trustees had the power to  purchase  a  licence  to  occupy,  but  that  was  quite  different  from  having  an obligation to sell 1 Kew Place and purchase a licence to occupy.  Where I differ with Mr Praat’s submissions is in my view that, just as the Trustees’ power was not to be constrained by the consideration that the proposed property was a licence to occupy, then neither may they decline to exercise that power for that very reason.  I think the use in Mr Nicholls’ will of the words “I direct” evidences Mr Nicholls’ intention that if his wife wished the Trustees to exercise their power to substitute for 1 Kew Place a

property purchased on a licence to occupy basis, then they could not decline to do so because of the impact on the estate of a characteristic of that type of property interest.

[32]     I note one further matter.  In her affidavit of 30 March 2011 (see paras 16 to

18), Ms Nicholls put the general issue that was at large between the Trustees and Mrs Jacka very much in the context of the effect of the Deed.  Ms Nicholls put the position thus:

While as a Trustee I would have been happy to consider and to agree to the Estate purchasing the Licence to Occupy prior to the Deed of Settlement, I see that request now imposing quite a different burden on my Dad’s Estate for the benefit of Beverley’s Estate than it might have done if it proceeded on the original terms of the Will.

[33]     In their submissions, and reflecting that view, Knapps submitted:

The payment by deduction of 30% (or less) of the value of the unit at the time of resale to the provider, MetLifeCare Oakwoods, is simply one of a number of factors that the Trustees are entitled to consider in making the decision whether to agree to the request or not.  The fact of the variation of the Will by Deed of Family Arrangement whereby the Estate transferred an absolute one third interest in the estate property at 1 Kew Place, Richmond, to the Applicant is another factor that the Trustees are entitled to consider when making that decision.

[34]     I think it is clear, however, that the terms of the Deed cannot alter the proper interpretation of Mr Nicholls’ will.  Just as in my view the Trustees could not prior to the Deed decline Mrs Jacka’s request because of the presence of the membership fee arrangements,   neither   can   they   do   so   after   the   execution   of   the   Deed, notwithstanding the effect the Deed has had on the size of Mr Nicholls’ estate.   I comment that although the question of the possible purchase of the Oakwoods unit was raised prior to the execution of the Deed, any difference of view on the “power/duty” point that there may have been between the parties was not addressed by the Deed.  If, anticipating the significance of the Deed for the size of Mr Nicholls’ estate, the Nicholls children had wished to clarify the terms of Mr Nicholls’ will on that matter, they should have done so at that point as, indeed, Mr Praat submitted to the contrary as regards Mrs Jacka.

[35]     I therefore find in favour of Mrs Jacka in terms of her application under the

Trustee Act.

[36]     Mrs Jacka originally sought an order that the Trustees enter into an agreement for the purchase of the Oakwoods unit, subject to the sale of 1 Kew Place.  The order now required would appear to be that – as Metlife has indicated it will do – the Trustees should become parties with Mrs Jacka to the occupation rights agreement already entered into on the two thirds/one third basis reflected in the Deed.  I suggest that Mrs Jacka and the Trustees settle an appropriate form of order between them, and submit it to the Court for sealing.

Costs

[37]     Mrs Jacka seeks costs. Although Mrs Jacka has succeeded in this application, I consider that this is a case where it is appropriate that costs lie where they fall.  The Trustees have acted reasonably throughout.  Questions relating to the interpretation of wills are never straightforward.   Moreover, the Trustees facilitated Mrs Jacka moving into the Oakwoods unit, notwithstanding these proceedings, on a basis that was favourable to her. Accordingly there will be no order for costs.

“Clifford J”

Solicitors:

Pitt and Moore, Nelson for the applicant ([email protected]) Knapps Lawyers, Nelson for the respondent ([email protected])