Wilson v Davidson

Case [2017] NZCA 468

IN THE COURT OF APPEAL OF NEW ZEALAND
CA313/2016
[2017] NZCA 468
BETWEEN

CATHERINE VIRGINIA WILSON, PATRICIA ANNE MATHESON, BARBARA ANN SMITH, RACHEL ELIZABETH WATSON, JOHN GEORGE HEALY
Appellants

AND

HELEN IRENE DAVIDSON
Respondent
Hearing:

7 September 2017

Court:

Asher, Courtney and Gendall JJ

Counsel:

R G R Eagles for Appellants
J C D Guest for Respondent

Judgment:

18 October 2017 at 11 am

JUDGMENT OF THE COURT

A        The appeal is dismissed. 

BWe order that the respondent’s actual costs be paid out of the estate.

____________________________________________________________________

REASONS OF THE COURT

(Given by Asher J)

Introduction

  1. This appeal concerns the interpretation of, or correction of, a will that is said to contain an error.  On 8 October 2013 the will-maker, Annie Dillon, was residing at the Chatsford Retirement Village at Mosgiel.  On her instructions a will had been prepared by her solicitor.  She executed that will on 8 October 2013 (the Will) and in paragraph 3(a) made a bequest of “my house unit at Chatsford to Robert Rutter”.  In fact Ms Dillon did not own a unit in the Chatsford Retirement Village.  Rather, as is common in New Zealand retirement villages, she had an occupation right agreement with Chatsford Management Ltd, and the rights of occupation of the unit were personal to her and could not be transferred.  She had no legal ability to transfer her house unit to another.  Ms Dillon died on 2 February 2014.

  2. On 30 September 2015 the nephew and nieces of Ms Dillon filed an application under the Declaratory Judgments Act 1908, seeking a declaration that the gift of the house unit at Chatsford to Mr Rutter failed, and that any value attaching to Ms Dillon’s occupational rights to the house unit form part of Ms Dillon’s residuary estate, and therefore were available to them as residuary beneficiaries.

Background

  1. The agreement between Ms Dillon and Chatsford Management Ltd terminated on Ms Dillon’s death, but her estate was then entitled to a termination payment which was defined under the agreement.  The amount actually paid to the trustee of the estate on the basis of this term of the agreement was $275,985.25, together with an additional $15,150 for improvements installed during Ms Dillon’s lifetime.  Thus the value of the interest in the unit was $291,135.25 on Ms Dillon’s death.  Under the Will the residue of her estate after payment of debts was to be divided equally between her nephew and nieces.  The nephew and nieces are the appellants in this proceeding.

  2. The respondent is the executrix of the will, Ms Davidson.  Ms Davidson was Ms Dillon’s solicitor.  On 19 October 2015 Ms Davidson filed an originating application:

    For an order under section 31 of the Wills Act 2007 correcting the last Will of ANNIE ANDERSON DILLON late of Dunedin, deceased dated 8 October 2013 by replacing the words “my house unit at Birchleigh” in paragraph 3(a) with the words “my occupation rights in my house unit at Birchleigh including any proceeds therefrom”.

The references to “Birchleigh” are…

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Wilson v Davidson [2017] NZCA 468
Case
[2017] NZCA 468
Decision Date

CaseChat Overview and Summary

In the matter of Wilson v Davidson, the parties involved were the executors of the estate of Annie Dillon, who passed away, and Ms Davidson. The dispute centred on the interpretation of a clause in Annie Dillon's will and whether the extrinsic evidence provided by Ms Davidson should be considered in determining the meaning of the clause. The case was heard in the New Zealand High Court. The primary legal issue that the court had to address was whether the plain meaning rule, as established in English case law, applied to the interpretation of the will, and if so, whether the extrinsic evidence provided by Ms Davidson could be considered under section 32 of the relevant legislation.

The court determined that the plain meaning rule, which generally prohibits the use of extrinsic evidence to interpret the terms of a will unless the wording is ambiguous, uncertain, or unclear, did not strictly apply in this case. The court found that the Judge had considered extrinsic evidence in reaching the conclusion about the bequest to Mr Rutter. The court reasoned that the background circumstances of the occupation right agreement were relevant and should have been considered as part of the interpretation process. Furthermore, the court noted that the Judge's reliance on the English case of Re Glassington was misapplied, as the original case had indeed used extrinsic evidence to interpret the will.

The outcome of the case was that the court found that the Judge had erred in his interpretation of the clause in the will and that extrinsic evidence should have been considered. The court concluded that the Judge's reliance on the plain meaning rule was misplaced and that the background circumstances of the occupation right agreement were relevant to the interpretation of the will. The final orders of the court would likely involve directing the executors to reconsider the clause in light of the appropriate interpretation of the extrinsic evidence.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Section 32 can be seen as a statutory reflection of the armchair principle.[10] It provides:[10]Law Commission Succession Law Wills Reforms, above n 6, at [235]. 32 External evidence(1)This section applies when words used in a will make the will, or part of it,—(a)meaningless; or(b)ambiguous on its face; or(c)uncertain on its face; or(d)ambiguous in the light of the surrounding circumstances; or(e)uncertain in the light of the surrounding circumstances.(2)The High Court may use external evidence to interpret the words in the will that make the will or part meaningless, ambiguous, or uncertain.(3)External evidence includes evidence of the will-maker’s testamentary intentions.(4)The court may not use the will-maker’s testamentary intentions as surrounding circumstances under subsection (1)(d) or (e). Prior to the modernising statutes over the last 50 years in the United Kingdom and Australia, there was no statutory power to rectify a will. The traditional position was that a Court could not rectify a will.[11] However, that common law position was increasingly doubted and criticised.[12] The position was settled when the United Kingdom and Australia enacted sections that gave the courts the power to correct errors in a will.[13] Section 31 of the Act now gives the New Zealand High Court this power. It provides:31 Correction(1)This section applies when the High Court is satisfied that a will does not carry out the will-maker’s intentions because it—(a)contains a clerical error; or(b)does not give effect to the will-maker’s instructions.(2)The court may make an order correcting the will to carry out the will-maker’s intentions. Nation J, applying the English decision of Re Glassington,[14] held:[26] I consider the provision in clause 3(a) of Annie Dillon’s will is to be interpreted in accordance with what was clearly her intention. On the actual wording in the will, without having to resort to the further evidence from Ms Davidson, it is clear that she intended Mr Rutter to have the benefit of her interest in that unit. That interest was her interest in the occupation agreement which relates to the same property. It is not significantly different in the way an interest in a farm was different from ownership of 75 per cent of the shares in a company which owned that farm.[14]Re Glassington [1906] 2 Ch 305 (Ch). In Nation J’s view the plain meaning of the words was that the bequest to Mr Rutter was of the bundle of rights associated with the occupation right agreement including the right to a termination payment.[15] Nation J considered that it was “not necessary to resort to extrinsic evidence” in order to reach that conclusion, and that s 32 was not relevant.[16] [15]Wilson v Davidson, above n 2, at [18]. [16]At [35]. We do not consider that the result reached by the Judge was available without regard to the extrinsic evidence. Indeed, in his reasoning the Judge took into account more than the words in the Will and its internal context. He expressly referred to the background circumstance of the occupation right agreement, which was not referred to at all in the Will. We also note that, in the case he relied on, Re Glassington, Joyce J did not decide the case on the plain meaning of the words.[17] In that case the issue was whether a devise of all real estate could be read as referring to a share under a trust of real estate. Joyce J decided, relying explicitly on extrinsic evidence, that the devise was of the testatrix’s beneficial interest in the trust.[18] In this respect we do not agree with the Judge’s interpretation of the case law and his reasoning. [17]Re Glassington, above n 14.[18]At 315.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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