AUSTRALIAN EXECUTOR TRUSTEES LTD -v- FERMOYLE [2024] WASC 209 (21 February 2024)

8.1 -Trust must include not only the property, but everything that forms part of my Estate.

The Trust must take care of not only a place of residence for [the defendant], be it an apartment, house or frail care centre, but also pay all his living expenses, including holidays, entertainment and so on.

Perhaps an annual allowance of say $50,000.00, increased by 3‑4% annually for the living expenses, until he dies or is incapacitated. Should he be incapacitated the Trust·fund must take over the care of all his expenses.

8.6 If the Trust vests, if [the defendant] becomes incapacitated, who pays for his care and living expenses thereafter?

1. It appears from an email sent by Ms Pritchard to the deceased that they spoke on 11 March 2021, following which a further draft will was sent to the deceased. Clause 7 of that March 2021 draft was not amended in accordance with the deceased's instructions of 6 March 2021, in that the bequest of the deceased's household goods, motor vehicles, jewellery and personal items was not made. Instead, those items were now identified in cl 8.1 as forming part of the assets of the testamentary trust established by that clause, together with a number, but not all, of the deceased's other assets, contrary to the deceased's instructions of 6 March 2021 set out above.
2. New cl 8.5 and cl 8.6 relating to the provision of accommodation to the defendant by the trustees of the testamentary trust were inserted. The terms of the former cl 8.7 remained unchanged, save that the definition of 'Vesting Date' was changed so that the Family Fund would vest only upon the defendant's death and not his incapacity.
3. A draft letter dated 23 April 2021 addressed to the plaintiff was subsequently prepared by NashClavey‑Mandurah advising that the deceased had requested that the plaintiff act as executor of her estate. Relevantly, the letter stated:

I have been instructed by Mrs Fermoyle to prepare her will and enduring power of attorney.

Mrs Fermoyle had requested that Australian Executor Trustees Limited act as her executor and default attorney in circumstances where her husband ... is unable to act.

I have provided Mrs Fermoyle with a copy of information outlining the services provided by Australian Executor Trustees Limited as well as the scale of fees and she has made her decision with this in mind.

The primary beneficiary of Mrs Fermoyle's trust is her husband ..., the purpose of which is to ensure that adequate and proper provision is made for [him] during his lifetime. More specifically, she hopes to provide for him some flexibility around his accommodation, whether he chooses to remain in their home or move to an alternative residence.

Mrs Fermoyle owns quite significant assets of a value of approximately $... and it is her intention that they be utilised by [the defendant] during his lifetime but ultimately pass for the benefit of her residual beneficiaries.

1. That draft letter is equivocal. It may refer only to the assets specifically identified in cl 8.1 of the March 2021 draft. Further, there is no evidence that the plaintiff ultimately received a letter in those or similar terms.
2. A letter of intent prepared by the deceased signed by her and dated 23 May 2021 evidences that the deceased wished her trustees ensure that the defendant be fully cared for with a monthly allowance over and above payment of his general and living expenses, including the costs of overseas holidays.
3. As stated above, the will executed by the deceased is dated 22 April 2022. Ms Pritchard was one of the witnesses to the will. The executed will is in the same terms as the March 2021 draft, save that cl 7 of the will makes a specific gift of the deceased's household goods, jewellery, motor vehicles and personal items to the defendant consistent with the deceased's written instructions of 6 March 2021. There is no evidence as to when or how the will came to take that form or whether the deceased made a will between 6 March 2021 and 22 April 2022.
4. In an email to the plaintiff's solicitors dated 4 July 2023, Ms Pritchard stated:

[F]rom my recollection it is my understanding that Mrs Fermoyle did intend for all of her assets to be first held under a testamentary trust under which the income and capital would be applied by the trustees for the maintenance, advancement and benefit of her husband for his lifetime and upon her husband's death the remainder of her assets were to be divided between her named residuary beneficiaries in accordance with the percentage shares in clause 9 of the 2022 Will.

1. I note that Ms Pritchard did not have access to the NashClavey‑Mandurah file relating to the preparation of the will when she wrote that email. However, having regard to the relatively short lapse of time between Ms Pritchard's witnessing of the will in April 2022 and her email of July 2023, I accept Ms Pritchard's unassisted recollection is accurate.
2. Before making an order for rectification, the court needs to be satisfied, on the balance of probabilities,[1] of the following:[2]
   1. the testator's testamentary intentions at the time the will was made;[3]
   2. that the will, as drafted, on a proper construction does not give effect to the testator's testamentary intentions;[4]
   3. that the will does not express the testator's testamentary intentions because of a clerical error or because of a failure to give effect to the testator's instructions; and
   4. the proposed rectification is in a form that gives effect to the testator's intentions.[5]
3. I find, having had regard to the amendments made to successive drafts of the will, the deceased's written instructions regarding the February 2021 draft, the terms of the will and Ms Pritchard's recollection of the deceased's instructions, that the deceased intended that the whole of her estate be held upon a testamentary trust for the accommodation, maintenance and benefit of the defendant for his lifetime with her trustees to have power to apply the capital and income of that trust fund for those purposes.
4. The deceased further intended that the property of that trust would be distributed to the persons and entities named in cl 9 of the will on the death of the defendant.
5. As drafted, however, cl 8 of the will refers to two trusts. The first, created by cl 8.1, identifies what are to be the assets of that trust, which are less than the whole of the deceased's estate. Clauses 8.2 to 8.6 evidence that the primary purpose of the trust is to provide accommodation for the defendant and cl 8.2 states that the defendant is to have the use and occupation of the Property until his death or incapacity. The will makes no provision for the vesting of that trust.
6. The second trust, identified as the Family Fund, is referred to in cl 8.8. The property of that trust and the trustees are not identified by the will, although it can be inferred from cl 8.8(b) that the trustees of the Family Fund are to be the same persons as the trustees of the trust created by cl 8.1. Clause 8.8(a) provides for the vesting of the Family Fund and cl 8.8(b) directs the trustees to apply the capital and income of the Family Fund for the defendant's proper maintenance and benefit.
7. The intention to give effect to the deceased's instructions can therefore be discerned from the will in that the two trusts make separate provision for the defendant's accommodation and his maintenance during his lifetime, but the will in its terms does not achieve that goal. The express reference to the Family Fund being a separate trust makes it difficult to construe the will as establishing a single trust for the benefit of the deceased with the property of that trust being that identified in cl 8.1.
8. Even if that could be done, the will would not provide for the whole of the deceased's estate to be held upon that trust, as I have found the deceased to have intended. The will therefore does not give effect to the deceased's testamentary intentions. I am satisfied that has occurred due to a failure to give effect to the deceased's instructions in the course of the preparation of a will.
9. In my opinion, the reference to the deceased's interest in the Property forming part of the deceased's residuary estate upon the vesting date in cl 8.9 is due to a failure to make provision for the additional property identified as trust property in cl 8.1 of the March 2021 draft, whereas the reference to the Family Fund in cl 8.8 appears to have been employed in an attempt to make specific provision for the maintenance of the defendant, or otherwise through inadvertence.
10. For these reasons, I will make orders to rectify the will by inserting a reference to all of the deceased's other assets as at the date of her death in cl 8.1 and by varying cl 8.8 and cl 8.9 of the will to refer to the trust fund, rather than 'the Family Fund' and 'my interest in the Property', respectively.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Hinds v Collins [2005] QSC 362; [2006] 1 Qd R 514 [9].

[2] Douglas v Douglas [2017] WASC 184 [17].

[3] Vescio v Bannister [2010] NSWSC 1274; (2010) 3 ASTLR 619 [12] ‑ [15].

[4] ANZ Trustees Ltd v Hamlet [2010] VSC 207 [3]; Vescio v Bannister [14].