Abernethy v Simpson [2007] NSWSC 186 | Case summary

6386/05 - ABERNETHY v SIMPSON JUDGMENT 1 HIS HONOUR: This is the hearing of a separate question arising in the administration of the estate of the late Colin Charles Abernethy. The present proceedings seek construction of the will and also an order under the Family Provision Act 1982: it is necessary to deal first with the question of construction and this has been isolated as a separate issue with the Family Provision Act matter postponed. 2 The parties lived in the Tweed Heads area and the family had a large parcel of land at Terranora. 3 A convenient place to start is with the present plaintiff's grandfather, Ronald Walter Abernethy, who was the registered proprietor of 9 titles constituting a block of 36.58 hectares. The grandfather, as I will continue to call him, died on 27 May 1997 and probate was granted to the plaintiff's grandmother, Freda. There was an executor's transmission application of all the lands to Freda. 4 By transfer dated 27 March 2003, the land was transferred to the beneficiaries of the grandfather's estate. The transfer was registered on 2 May 2003. 5 The grandfather's will had provided that his estate was to be split into 12 equal portions, four of them to Graham Ronald Abernethy, three to Nola West, three to Denise Whipps and two to Colin Charles Abernethy, whom I will call "the father". It would seem that the father had already obtained some benefaction from the grandfather and that was the reason for his smaller portion in the will. 6 The father made his will on 8 February 2001. Para 3 of the will is as follows: "I leave such interest as I may have at the time of my death in the Estate of my late father Ronald Walter Abernethy to my son Daniel Robert James Abernethy for his own use and benefit absolutely." 7 The residue of the father's property passed to his de facto spouse, Maria Muir, as to 75%, as to 10% to his son, the present plaintiff, and the other 15% to various other persons. 8 Due to Freda's age and infirmity, new trustees for the estate of the grandfather, Messrs Stainlay and West, were appointed on 30 August 2002 and the property was transferred to the new trustees on that day. Clearly by that date the grandfather's estate had been fully administered. Whether that had occurred before the father's will made on 8 February 2001 is unclear. 9 The father and his siblings apparently considered that it would be advantageous to sell the property that had passed from the grandfather in one lot. Accordingly, they entered into a put and call option deed on 4 August 2003 under which the whole lot of them gave an option over the whole of the land to Metricon Queensland Pty Ltd. That option has been extended from time to time and already large sums of money by way of option fee have been paid to the father and his siblings. 10 The father, Colin Charles Abernethy, died on 15 April 2005. 11 As at that date, the whole of the grandfather's estate had been distributed, but there was still the identifiable parcel of land held in specie which is the land, the subject of the put and call option. The question is whether the father's part of that land does come within the expression "such interest as I may have at the time of my death in the estate of my late father" and so passes to the plaintiff, or whether it is part of the residue and so passes to the de facto spouse and other persons. 12 The matter was argued before me on 31 January 2007. Mr M Lawson of counsel appeared for the plaintiff and Mr C Hodgson of counsel appeared for the third defendant, Maria Veronica Muir, the de facto spouse. The first and second defendants are solicitors and they submitted on the basis that the court had before it the two protagonists whose counsel could well and truly put all relevant matters before the court. 13 I am indebted to both Mr Lawson and Mr Hodgson for their concise arguments of the relevant points. Both put in written submissions and spoke briefly to them. 14 Mr Lawson put that on the proper construction of the will, clause 3 revealed the father's intention to give to the plaintiff all the property that he inherited from the grandfather. The expression "such interest as I may have at the time of my death in the estate of my late father" was a phrase employed by the father to describe the assets which he intended to give to his son by describing their source. The will shows that the father meant to bequeath to the son such assets as came to him from the grandfather. It will be most artificial to construe the phrase as meaning that the son benefited only whilst the grandfather's estate was not fully administered. If it were otherwise, the gift to the son would take effect as a gift for a very limited time only. 15 Moreover, this time would be out of the control of the father and completely within the control of a third party, namely, the trustees of the grandfather's estate. It would be most artificial indeed to think that this could be the intention of the father; rather it was the father's intention to pass on to his son the property in the family farm that he himself had inherited from the grandfather. 16 Mr Hodgson, on the other hand, put that the words are plain. The will speaks on the date of death and the testator has deliberately used language indicating that the property that is to pass under clause 3 is such interest as he had, as at the date of his death, in that estate. The actual real property was not within that description, and accordingly, did not pass to the son. 17 At this point I must make two digressions. 18 First, a question of admissibility of evidence arose. The question is whether para 5 of the affidavit of M M Delany of 1 December 2006 is admissible. In that affidavit, Mr Delany says that he obtained discovery of the file relating to the making of the will of the father and found in it a file note. The file note dated 31 January 2001 appears to be from a Tania Daniels who I infer was an employee of the firm of Egan Simpson of Murwillumbah, the solicitors who made the will, to Anne Simpson, the solicitor who drew the will and who is the first defendant to these proceedings. It will be remembered that the will was actually made on 8 February 2001. The note is one of a series of notes made by Ms Daniels or Ms Simpson about the will between 25 January 2001 and the date the will was signed. The note read: "Colin called to say he wants to make a change to his Will. Said he has a one-sixth interest in a family estate and wants this all to go to his son, Daniel. Said he wants to leave Maria with enough equity so she can stay in the house, therefore wants 80-100% of the house and farm to go to her. Asked if he can make an appointment in the afternoon around 3:30pm so said I'd check with you and give him a call back to book him in. If okay I will make it for Tuesday the 13th." 19 The problem in the present case is, what property is meant by the description used in the will in clause 3. There are three possibilities in this sort of case. First, there is a situation where one piece of property is actually described in which case the court cannot look at any extrinsic evidence. The second situation is where there is no piece of property that actually answers the description, in which case the court can look at the surrounding circumstances but not direct declarations of intention. The third situation is where there is an equivocation, that is, where there are two or more pieces of property which exactly answer the description, in which case one can look at the testator's intentions by way of his direct statements (see in general The National Society for the Prevention of Cruelty to Children v The Scottish National Society for the Prevention of Cruelty to Children [1915] AC 207 and Garrow, Law of Wills Ch 20). 20 The present case is not one of equivocation. 21 The material might be admitted on another basis, and that is, if there was a misdescription; see Re Ofner [1909] 1 Ch 60 and Re Nesbitt [1953] 1 WLR 595; [1953] 1 All ER 936. As Cross J said in Re Tetsall [1961] 1 WLR 938, 940: "This is, I think, a case of misdescription and in such a case any evidence is admissible which shows that the testatrix on other occasions used the words in question to designate some person or object to which they do not properly refer, even though that evidence is contained in an earlier will or instructions for an earlier will." 22 Re Ofner was further considered by Gillard J in the Supreme Court of Victoria in Re Bell [1969] VR 597, where his Honour said that evidence can be admitted not to show what the testator really intended, but to show the meaning of what he had written, particularly in cases where the literal meaning of the words was nonsensical at both the date of the will and the date of death. However, see Rabin v Gerson Berger Association Ltd [1986] 1 WLR 526, where the English Court of Appeal held that one could not look at counsel's advice given before a charitable trust deed was executed to determine the meaning of the words used. 23 However, the present case is not a situation such as Nesbitt and Tetsall where the actual will contained a problem of identity which was shown to be a mistake when one looked at an earlier will. 24 It does not seem to me that the evidence is admissible: (a) because there is no confusion as to the meaning of the term at the date of the will; and (b) in any event, the memo does not enable one to get any better idea of what the expression meant. 25 I would make two further comments: (a) that the material may well be admissible on a Family Provision Act application; and (b) I do not in any event consider that it materially affects the question of construction. 26 The second digression is that in addition to the parcel of real estate, the grandfather's estate also had some undistributed cash in it as at the date of the will. The cash was, in due course, paid over to the father and there is no firm indication as to whether it is still represented by any particular asset into which it could be traced as at the date of the father's death. 27 The case on real property only succeeds because the property is still in an identifiable state. This is not the situation with the cash, so that gift must fail; see Moore v Moore (1860) 29 Beav 496, 497; 54 ER 720. 28 I now return to the mainstream of my reasons. 29 Mr Hodgson referred to a number of cases which at first blush appear to be in pari materia. In chronological order the first is Clark v Browne (1854) 2 Sm & Giff 524; 65 ER 510, a decision of Stuart VC. In that case the testator gave one-third part of the amount of money due to him from his claim on a testator's estate in the course of administration to his son and the other two-thirds to his wife and son-in-law for life, with remainder to that son. The larger part of the amount was, after the date of the will, received by the testator and invested. The question was whether the gift was adeemed or was now represented by the investments. The Vice Chancellor said that the doctrine of ademption was that if a legacy be a specific debt and if after making the will the testator receives the amount so as to extinguish the debt, there is nothing upon which the words of the gift can operate. However, the civil law was that where a testator sets apart a specific fund in order that it may be applied for the benefit of a legatee the principle of ademption does not apply. He held that the case before him fell into that category. 30 However, in Harrison v Jackson (1877) 7 Ch D 339, Jessel MR disapproved of Clark v Browne. In the case before Jessel MR, there was a bequest of certain preference shares "now standing in the names of the trustees of my settlement, and bequeathed to me by my late wife". Between the date of the will and the date of the testator's death the shares were redeemed. The shares were never transferred into the testator's name and when they were redeemed the proceeds were used to purchase 88 shares in the Lancaster & Yorkshire Railway Company. The question before the court was whether those 88 new shares belonged to the plaintiff as specific legatee under the will or whether they formed part of the testator's residuary personal estate. Jessel MR dealt with the matter by looking at the law of ademption. He said a specific legacy is adeemed when the subject matter of it has been alienated by the testator in his lifetime. He said that the case was a simple one. The testator has received the shares, sold them and bought something else, and that were it not for authority, he would stop there. He said that it was difficult to understand how the decision of Stuart VC in Clark's case could be reconciled with the doctrine of ademption. He did not follow the case and held that the shares formed part of the residuary personal estate. 31 In Morgan v Thomas (1877) 6 Ch D 176, Fry J had to decide a case where a testator had bequeathed to Thomas "all the real and personal estate which I am or shall or may be entitled to under the will of my late uncle". Between the date of the will and the date of his death, he received £800 from the estate of his uncle and invested part of it in the purchase of railway stock. Fry J held that Thomas took the railway stock. 32 Fry J did not approach the matter on the basis of the doctrine of ademption: he thought the matter was a pure matter of construction. He said there were two possible constructions: (a) that the property to pass by the bequest should be in the very condition in which it reached the testator's hands from the estate of his uncle; or (b) that the bequest was of the personal estate derived from the uncle in whatever form it might exist, if it still be distinguishable. His Lordship took the second construction. Indeed, he said that on this question of construction no question of ademption arose. 33 It should be noted, of course, that whether there has been ademption is really just a question of construction in any event: Re Slater [1906] 2 Ch 480, 484. One first must ask, what is that which is bequeathed? The next enquiry is where is that which was bequeathed? Did it or did it not exist at the testator's death? One must then ask whether the bequest was so worded as to show that the subject matter was to pass, whatever the condition with respect to investment or otherwise in which it might be found at the testator's death. 34 Morgan v Thomas has been considered on other occasions by English courts, though not for about 80 years. It was distinguished in Re Bridle (1879) LR 4 CPD 336, where it was thought that a gift of a mortgage was adeemed even though the monies paid to the testator to redeem the mortgage were put into identifiable investments. 35 Morgan v Thomas was applied in Re Kenyon's Estate (1887) 56 LT 626. 36 It was also applied in Re Bythway (1911) 80 LJ Ch 246, where Joyce J said at 248: "It has often been said that the doctrine of ademption has more frequently than not frustrated the intention of the testator, and it is not without some satisfaction in my own mind that I see the way in which Mr Justice Fry dealt with the matter in the case of Morgan v Thomas, which is, no doubt, good law. I rather think that, when one comes to examine the cases, it always comes back merely to a question of construction, and I think Lord Lindley says in some case that what you have to ask yourself first is, 'What is it which is given?' You determine first what it is that is given by the will, and then you ask the question, 'Where is the thing that is given?' If the thing that is given does not exist, to that extent it is not given." 37 Jarman on Wills, 8th ed (Sweet & Maxwell, London, 1951) p 1063 says: "Sometimes a testator describes personal property with reference to the source from which he derives it: as where he gives to A 'all the property to which I am or may be entitled under the will of X' … . The general principle seems to be that so long as the property in question continues to exist in specie, or can clearly be traced into investments made by the testator and retained by him at his death, it will pass by the gift, but if it is sold and the proceeds are spent by the testator or mixed with his other property, the gift fails."

At p 1073 the learned author says: "If the property is actually made over to the testator during his lifetime, the question is more difficult. If it were converted into money and mixed by him with his own property, the bequest would fail, but this result does not necessarily follow if the property is preserved by him in specie or can otherwise be traced and distinguished from his other property." 38 There have been two Australian cases where the present sort of problem has been raised. In Re Hackett [1966] VR 232, a will provided that the testatrix's stepchildren should take any estate "to which I may be entitled pursuant to the provisions of the will of my late husband". The husband had died in 1938, the will was made in 1960. There had been an in specie distribution of the real estate in 1939, but the testatrix and her stepchildren, who were the beneficiaries, let out the real estate and shares of income were often received under the name "Estate W C Hackett Deceased". Winnecke CJ held that the realty passed under the gift. He was particularly impressed with the words "pursuant to". 39 In Re Bell, Gillard J had to deal with a will where a testator, who died in 1964, by his will executed in 1959 devised to his trustees for a granddaughter "any share or interest I may have in the estate of my late wife at the date of my death". The wife had died intestate in 1945 and in 1957 a one-third part of the realty had been transferred to the testator. 40 Gillard J said that literally the will just did not make sense, either at the time when it was executed or at the time of death. That being so, he was entitled to admit extrinsic evidence which may afford an explanation of the terms used. The evidence was admissible not for the purpose of showing what the testator really intended, but simply to explain what the testator had written; see 600-601. In that case, as the testator was the administrator of his wife's estate, it may be reasonably presumed that he would have known that the estate of his wife had been wound up. Accordingly, he must have been using the words in the loose sense of property derived from his wife and accordingly it was that which passed to the granddaughter. 41 In the instant case, as at the date of the will, it would appear that the words used by the testator did have meaning because the estate of the grandfather had not been distributed. However, we do not know one way or the other whether it was fully administered. It was obviously fully administered in 2002 when new trustees were appointed, but we do not have sufficient information as to what was the state of the estate at the date of the will. 42 Mr Hodgson puts particular emphasis on the words "at my death". He says that this shows that it was not, as would appear in some of the ademption cases, the property which existed as at the date of the will which may exist at the date of death in some other form, but rather that interest which existed only at the time of death. This, at least at first blush, appears to be a fairly strong point, though it must be remembered that in Re Bell the words "at the date of my death" were used and Gillard J considered that this meant property at the date of death which could be taken to have had its source in the wife's estate. 43 Naturally the facts were a bit different in the Bell case. 44 However, the Hackett case "any estate … to which I may be entitled pursuant to the provisions of the will of my late husband" points in the same direction. Again, the case is, strictly speaking, distinguishable first because the words "pursuant to" the provisions of the will are used and as at the date of the will, the estate had been fully administered and distributed, so that as at the date of the will and as at the date of death as in the Bell case the provision was actually nonsensical. 45 I said at the end of the oral argument that my mind favoured the third defendant's position. However, having thought about the matter more maturely, and having now read the Victorian cases and more cases than were cited to me in court, my mind moved in the other direction. Accordingly, I sent a note to both counsel informing them of the effect that the Victorian cases were having on me, and inviting further submissions. 46 Mr Lawson's further submissions put strongly that in order to maintain a consistent approach to questions of construction, I should proceed along similar lines to the learned judges who decided Re Hackett and Re Bell. He put that the latter case, in particular, was very close to the present. 47 Mr Hodgson in his further submissions reminded me that one must approach the calling in aid decisions on similar wills with caution. He cited what Bryson J had said in Perpetual Trustee Co Ltd v Attorney General (NSW) (27 March 1987, unreported) pp 7-8: "… it is necessary to remember the need to construe the words of the instrument in question, the meaning of which is incapable of being established by any earlier judicial decision which does not deal specifically with that instrument itself. The meanings of wills are not to be discovered by reference to a body of jurisprudence which has developed around any particular word or phrase and can be taken to establish a legal meaning for it; …" 48 I am grateful for this reminder, and the wisdom of Bryson J's statement, and I trust I have been cautious. However, it must also be said that noting the mode of approach to similar words by judges of great standing is usually of great value to a 21st century judge. Moreover, uniformity of approach is in the public interest, not the least reason for which is that drafters of wills receive guidance in their task. 49 After having considered those submissions as well as the rest of the material, my mind is in favour of the plaintiff's construction. It seems to me that the flavour in the cases is that where one has a contest of construction as both counsel concede this case is, that the trend of the authorities is in favour of construing a gift such as "the property I am entitled to under the estate of X" as meaning the property which derives from that estate rather than looking to the actual equitable or legal interest that the testator had at the relevant time. 50 Mr Hodgson points out the differences in the facts of the Victorian cases and this one. However, the cases show that the court tends to pass over misuse of technical language in its endeavour to glean the testator's true intention. 51 Accordingly, I make declaration 1 as asked in the amended summons of 12 May 2006 and I will stand the matter over for mention in my list on 20 March 2007 at 9.30 am so that the remainder of the proceedings can be the subject of directions as to their future.

Abernethy v Simpson

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Judgment (12 paragraphs)

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