Wilson v Davidson

[2016] NZHC 1238

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2015-412-000113 [2016] NZHC 1238

UNDER

The Declaratory Judgments Act 2008

IN THE MATTER

of the estate of ANNIE ANDERSON DILLON

BETWEEN

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

Plaintiffs

AND

HELEN IRENE DAVIDSON Defendant

CIV-2015-412-000117

UNDER  The Wills Act 2007

BETWEEN  HELEN IRENE DAVIDSON Applicant

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

Respondents

Hearing:	2 June 2016
Appearances:	C S N Gardner for Defendant/Applicant R G R Eagles for Plaintiffs/Respondents
Judgment:	9 June 2016

JUDGMENT OF NATION J

WILSON & ORS v DAVIDSON [2016] NZHC 1238 [9 June 2016]

Introduction

[1]      Annie Anderson Dillon was a retired farmer of Milton.  On 8 October 2013, she made a will.  She appointed a solicitor of Dunedin, Helen Irene Davidson, her executrix and trustee.   She made a gift of “my house unit at Chatsford to Robert Rutter”.

[2]      In her will Annie Dillon left $440,000 in legacies to a number of different people.   She left jewellery, heirlooms and ornaments to be divided as equally as possible between her nieces and forgave any debts that might have been due to her from personal loans made during her life.  The residue of her estate, after payment of debts, was to be divided equally between nephews and nieces or their respective children if any nephew or niece did not survive to share in the residue.  That residue, separate from the other legacies and the proceeds from the Chatsford unit, comprised some $648,000 when both proceedings were heard by me on 2 June 2016.

[3]      Annie Dillon died on 2 February 2014.

[4]      In correspondence to Ms Davidson, solicitors for the nephews and nieces contended the gift to Mr Rutter failed.  Ms Davidson filed an originating application for correction of a will seeking the replacement of the words “my house unit at Chatsford” with the words “my occupation rights in my house unit at Chatsford

including any proceeds therefrom”.1

[5]      At about the same time, the nephews and nieces filed separate proceedings. They  sought  a  declaration  that  the  gift  by  the  deceased  of  “my  house  unit  at Chatsford to Robert Rutter” fails and that any value attaching to the deceased’s occupational rights of her house unit form part of the residuary estate of the deceased and should therefore be available to the nephews and nieces.

[6]      Under   Annie   Dillon’s    occupation   right   agreement   with   Chatsford

Management Limited, her rights of occupation of her unit were personal to her and

1      As originally filed, the wording referred to “my house unit at Birchleigh”.  Birchleigh was the name of the retirement village when Annie Dillon first moved into it but the unit was the same as that referred to as “Chatsworth” in her last will. The application thus relates to that wording.

could not be transferred.  As is common with such occupation right agreements, the agreement terminated on Annie’s death.  Her estate was then entitled to a termination payment being the value on exit, as that was defined under the agreement.   The amount paid to Annie Dillon’s trustee in this regard was $275,985.25.  In addition, her trustee accepted a payment of $15,150 for improvements which Annie Dillon had made to her unit during her lifetime.  The value of Annie Dillon’s interest in her unit at Chatsford was $291,135.25.

[7]      The issues in this case are:

(i)    Are those proceeds to be given to Mr Rutter or must they fall into the residue for the benefit of the nephews and nieces?

(ii)  If they are to be given to Mr Rutter, does that require rectification of the will in the way Ms Davidson seeks?

[8]      Mr Rutter took no steps in the proceedings.  Ms Gardner, as counsel for the executrix, presented submissions as to why the gift to him should not fail and, if necessary, why the wording of the will could be rectified.   Mr Eagles made submissions to the contrary for the residuary beneficiaries.

The evidence

[9]      Two brief affidavits were filed in relation to the proceedings.

[10]     In her affidavit, Ms Davidson said she had been solicitor for Annie Dillon with regard to her personal affairs from July 2002, had taken instructions from her and attended on her when she signed her last will.  She had made 12 wills prior to that.  She produced an earlier will dated 21 August 2012.  It began with the gift of “my house unit at Birchleigh to Robert Rutter”.

[11]     Ms Davidson said “I knew from my discussions with the testatrix that she had befriended a person called Robert Rutter who was very kind to her and that she wanted to leave him her unit at Chatsford”.  She also said “I know that it was her intention that Mr Rutter would be able to move into her unit”, “it was clear that she

wanted to benefit Mr Rutter by leaving him her unit” and that, if she had realised he could not necessarily physically move into her unit, he would at least have the benefit of its value.  Ms Davidson acknowledged that the occupation agreement did not give either Annie Dillon or her estate power to transfer her rights and obligations directly to Mr Rutter.

[12]     Catherine Wilson is one of Annie Dillon’s nieces.   She swore and filed an affidavit for the nieces and nephews.  She is a solicitor practicing in Invercargill and a partner in the firm of Eagles Eagles and Redpath.  In a brief affidavit, she asserted that it was unclear exactly what Annie Dillon had wanted because Ms Davidson had produced no document as to the instructions she had received and no file note as to discussions she may have had with Annie Dillon as to her wishes.

[13]     Ms  Wilson  produced  with  her  affidavit  the  documentation  which Annie Dillon had signed when she went into the unit.   Those documents included the “application for occupation right agreement”.  That application form referred to her agreeing to pay $330,000 for the agreement including a deposit of $33,000.   A schedule of details attached to the application form also had details of a weekly personal service charge and of the amount that Annie Dillon would be entitled to as a termination payment.  That amount was $330,000 less a deduction from the initial

$330,000 of four per cent a year for a total of five years.  Annie Dillon signed that application form on 1 April 2010.

[14]     Ms Wilson also produced the occupation right agreement.  It was a document of some 40 pages including a chattels schedule.  At page 33 it set out, in specific terms, the annual community contribution and Chatsford Village Trust contribution that would be payable at the end of the occupation right agreement, four per cent for five years, resulting in a total deduction from the initial $330,000 of $66,000.  The agreement had been signed by Annie Dillon with her signature witnessed by Ms Davidson.   Ms Davidson signed a lawyer’s certificate certifying that she had explained to Annie Dillon the general effect of the agreement and its implications in a manner and in language that was appropriate to the age and understanding of Annie Dillon.

[15]     The hearing commenced with both counsel advising me that there was to be no cross-examination.   I indicated that, while there was clear evidence from Ms Davidson as to Ms Davidson’s state of mind and what she knew, there was little evidence  as  to  what Annie  Dillon  had  said  or  done  to  give  Ms  Davidson  that knowledge.  I indicated that I wanted to hear further evidence from her. After taking instructions, Mr Eagles agreed to this, as a result of which Ms Davidson was questioned by me and by both counsel.

[16]     The further evidence established to my satisfaction that Annie Dillon knew at the time she made her last will that:

(a)  her interest in the Chatsford unit was of value to her.  She had used funds from an investment portfolio to pay for the unit initially and had used monies available to her to pay for some improvements to the unit;

(b)  on termination of the agreement, she would be entitled to a refund of what she had paid for it but with a discount of an amount set by the agreement;

(c)  she wanted Mr Rutter to have the benefit of the unit, rather than her nephews and nieces, because he had demonstrated kindness to her and she wanted to recognise that kindness; and

(d)  she did not want her nephews and nieces to benefit from the unit (Ms Davidson was somewhat embarrassed at having to give evidence that Annie  Dillon  had  expressed  disappointment  at  a  perceived  lack  of support from nephews and nieces in contrast to the kindness shown to her by Mr Rutter.   However, with the benefit of some advice from Ms Davidson, Annie Dillon had changed her will and in her final will left the residue of her estate to nephews and nieces in contrast to the earlier provision for that residue to be shared between two charities and her sister).

[17]     I also accept Ms Davidson’s evidence that Annie Dillon was clear and firm that she wanted “my unit at Chatsford” to go to Mr Rutter.  Although Ms Davidson said she had not taken detailed notes as to the instructions she received, she had made a note as to this particular wish.  She said she had received the instructions to prepare a new will about two weeks before it was signed.   It was clear from her evidence  that  she  knew Annie  Dillon  well,  having  regular  contact  with  her  at Mosgiel and not just in relation to her wills.

Interpretation of the will

[18]     In my view, the words in the will “my house unit at Chatsford” should be interpreted and applied as referring to the bundle of rights associated with her occupation agreement, including her entitlement to the termination payment and compensation for improvements she made to the unit during her lifetime.

[19]     The primary rule of construction in interpreting a will is that the matter is to be determined according to the intention of the testator and that intention must be gathered from the will itself.2

[20]     In a recent case, Sutton v Public Trust,3  counsel for both parties and Simon France J said that the recent decision of the Supreme Court in the United Kingdom in Marley v Rawlings authoritatively stated the correct approach to be taken to interpretation of a will.   He referred specifically to the observations of Lord Neuberger:4

19.  When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party’s intentions.  …

20.  When it comes to interpreting wills, it seems to me that the approach should be the same.  Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or

2      Tanner v New Zealand Guardian Trust Co Ltd [1992] 1 NZLR 57 (HC) per Gallen J; approved by the Court of Appeal, Tanner v New Zealand Guardian Trust Co Ltd [1992] 3 NZLR 74 (CA).

3      Sutton v Public Trust [2015] NZHC 1844 at [32]-[33].

4      At [32], citing Marley v Rawlings [2014] UKSC 2, [2014] 2 WLR 213.

parties to the document by interpreting the words used in their documentary, factual and commercial context.  As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, para 64, “No one has ever made an acontextual statement. There is always some context to any utterance, however meagre.” To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396, that “[c]ourts will never construe words in a vacuum”.

…

23.  In my view, at least subject to any statutory provision to the contrary, the approach to the interpretation of contracts as set out in the cases discussed in para 19 above is therefore just as appropriate for wills as it is for other unilateral documents.  This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th edition,  chapter  15  and  the  recent  supplement  supports  such  an approach as indicated in RSPCA v Shoup [2011] 1 WLR 980 at paras 22 and 31). Indeed, the well known suggestion of James LJ in Boyes v Cook (1880) 14 Ch D 53, 56, that, when interpreting a will, the court should “place [itself] in [the testator’s] arm-chair”, is consistent with the approach of interpretation by reference to the factual context.

[21]     In Re Jensen, Fisher J summarised principles applicable to the construction and interpretation of testamentary provisions as including:5

(a)   The overriding objective is to give effect to the intentions of the testator. All canons of construction must be subservient to that end.  The testator’s intentions are to be gleaned from an objective appraisal of the testamentary documents viewed as a whole but in cases of doubt the wording is to be interpreted in the context of those facts which must have been in the contemplation of the testator.

(b)   If the testamentary language is unambiguous and discloses no obvious error, the Court must give effect to it as it stands.  The Court must guard itself against conjecture as to the testator’s possible true intentions notwithstanding the actual testamentary provisions or as to what he might have intended had he been better advised

[22]     Re Lewis’s Will Trusts concerned a will where the testator had left his farm to his son.6   He left the residue in his estate to his son and daughter equally. At the time he made his will and when he died, the testator did not own the farm.  It was owned by a company. At the time of his death the testator owned 750 of 1,000 shares in the

company.

5      Re Jensen [1992] 2 NZLR 506 (HC) at 510.

6      Re Lewis’s Will Trusts [1984] 3 All ER 930 (Ch).

[23]     The Court was asked to declare whether the deceased’s shares in the farming company were to be held for the son absolutely.  Scott J held the will could not be construed in that way because, on the evidence, it was clear the testator intended to refer to the farm as distinct from the shares.   Scott J said the will could not be construed in the way the son sought, because at the time he made his will the testator was under a misapprehension as to what he owned.  He held that the Court could not alter the language in the will to make the gift apply to “a different asset altogether”, notwithstanding that the Court may be satisfied as to what the testator would have

done had his mind been directed to the actual asset he owned.7

[24]     Scott J distinguished the situation he was dealing with from those where a testator had purported to make a gift of the whole of certain property but had only a partial interest in that property and the Courts had given affect to his intention by limiting the operation of the gift to what the testator in fact owned.  He distinguished

the situation he was dealing with from that in Re Gifford.8   There, the Court held that

a gift of war bonds was a gift of “Consolidated Inscribed Stock” which had been purchased with the proceeds from the sale of war bonds.  That had been appropriate under the principle that:9

[If] upon consideration of the relevant parts of the will you come to the conclusion that the testatrix intended to pass something and can determine what that something is, then the fact that a testatrix has given it a wrong description will not prevent her will taking effect in regard to that thing which is wrongly described.

[25]     Scott J also distinguished the situation he was dealing with from that in Re Glassington.10   There, a testatrix had made a devise of real estate.  She had no real estate but simply a share under a trust of real estate.   Joyce J in  the Chancery Division held that the share of the testatrix under the trust of real estate passed under the devise of real estate.  Scott J acknowledged that was an appropriate application

of the principle that:11

7      At 933.

8      Re Gifford [1944] Ch 186, [1944] 1 All ER 268 per Simonds J.

9      At 188, 269, cited in Re Lewis’s Will Trusts, above n 6, at 932. Referred to also in John Martyn and others Theobald on Wills (17th ed, Sweet & Maxwell, London, 2010) at [23-012].

10     Re Glassington [1906] 2 Ch 305.

11     At 315, cited in Re Lewis’s Will Trusts, above n 6, at 933.

[If] one can be satisfied that the testator or testatrix did intend, under the denomination of whatever has been referred to, to dispose of the particular asset which he had.

That is how the words in the will should be interpreted.

[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.

[27]     The situation here is much more akin to that in Re Glassington where a reference in a will to an interest in real estate was interpreted as referring to the testatrix’s share under a trust relating to that same property.

[28]     In proceedings CIV-113, I would not make the declaration which the nephews and nieces seek because I do not consider that the gift of “my house unit at Chatsford to Robert Rutter” fails.  The declaration I would make is that, pursuant to clause 3(a) of the will, Mr Rutter was entitled to any value attached to the deceased’s occupation right agreement for her house unit at Chatsford, including any proceeds from the occupation agreement.

Correction of the will

[29]     In interpreting the will this way, I am not altering “the language so as to make the gift apply to a different asset altogether”.12   If I am wrong in interpreting the will this way, I consider it would be appropriate, pursuant to s 31 of the Wills Act 2007, to correct the will in the way Ms Davidson seeks so that clause 3(a) reads:

3.    I give:

12     In contrast to the situation in Re Lewis’s Will Trusts, above n 6, at 933.

(a)   my interest in the occupation right agreement for my house unit at Chatsford, including any proceeds therefrom, to ROBERT RUTTER.

[30]     Section 31 states:

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.

[31]     Mr Eagles responsibly acknowledged that, in considering what constitutes a clerical error, the case law on drafting errors suggests the power to correct is quite wide, going well beyond mistakes in names, numbers or identities.

[32]     In written submissions, Mr Eagles said that s 31 might be applied:

… provided the Court had before it adequate evidence of the deceased’s instructions and intent, e.g. that the deceased had a special relationship with Robert Rutter, saw some need to benefit him financially in some way which had a connection to the house unit at Chatsford, something of a factual basis for the application under s 31 ...

He submitted that evidence was, however, not before the Court.  For reasons already discussed, I consider it was.

[33]     In Re Robertson, McKenzie J referred to the analysis of Chadwick J in the English decision of Re Segelman (deceased).13   Chadwick J held that there could be a clerical error through the introduction or omission of words to which the draftsman applied  his  or  her  mind  with  proper  understanding  of  the  instructions  she  had received but which did not achieve the object which the draftsman and the will- maker intended.   I accept this was the situation here.   Ms Davidson understood,

correctly, that Annie Dillon wanted Mr Rutter to benefit from her interest in her unit

at Chatsford.  If that was not achieved through the will making a gift of “my house

13     Re Robertson [2013] NZHC 2723, citing Re Segelman (deceased) [1996] Ch 171, [1995] 3 All

ER 676.

unit at Chatsford to Robert Rutter”, Ms Davidson, as the draftsman, should have used the words “my interest in the occupation right agreement for my house unit at Chatsford, including any proceeds therefrom, to Robert Rutter”.

[34]     If the gift failed because of the particular words used in the will in clause

3(a), I would have made the rectification sought because clause 3(a) would not have given effect to Annie Dillon’s instructions, i.e. that she wanted Mr Rutter to benefit from her interest in the house unit at Chatsford.

[35]     I received careful submissions from Mr Eagles as to the potential application of s 32.  That section is however of relevance only if external evidence is needed to interpret the words in the will where, without that external evidence, the words in the will would be “meaningless, ambiguous or uncertain”.  That is not the situation here. It is clear, from the words used in the will, that Annie Dillon wanted Mr Rutter to obtain the benefit of her unit at Chatsford.  It is not necessary to resort to extrinsic evidence, that is the evidence from Ms Davidson, as to the instructions she received from Annie Dillon to find this was Annie Dillon’s intention.  There could thus be rectification of the will in the way Ms Davidson seeks, applying s 31, without needing to resort to s 32.

Conclusion

[36]     Through both these proceedings, Helen Irene Davidson, as executrix and trustee in the estate of Annie Anderson Dillon, is entitled to a declaration that, pursuant to clause 3(a) of the deceased’s last will, Mr Rutter is entitled to any value attached  to  the  deceased’s  occupation  right  agreement  for  her  house  unit  at Chatsford, including any proceeds from the occupation agreement.

[37]     Alternatively,  Ms  Davidson  would  have  been  entitled  to  have  the  will rectified by amending clause 3(a) to read:

3.    I give:

(a)   my interest in the occupation right agreement for my house unit at Chatsford, including any proceeds therefrom, to ROBERT RUTTER.

Costs

[38]     There may be no need for any order as to costs as the actual costs of Ms Davidson, as executrix, will be paid out of the residue, effectively to the cost of the nephews and nieces who were the unsuccessful parties in these proceedings.  If there is any dispute over costs, a memorandum is to be filed for Ms Davidson within 14 days, any response within a further seven days.  The memoranda are to be no longer than three pages.

Solicitors:

Downie Stewart, Dunedin

Eagles Eagles & Redpath, Invercargill.