Clay & Ors v Clay & Anor [2003] TASSC 63 (30 July 2003)

[2003] TASSC 63

CITATION: Clay & Ors v Clay & Anor [2003] TASSC 63

HEARING DATES: 25, 27 February, 20 March, 24 June 2003

Succession - Wills probate and letters of administration - Construction and effect of testamentary disposition - Legacies and devises - Whether absolute gift void for repugnancy - Rule in Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 115.

In the Will of Samuel John Gray, Public Trustee v Gray B42/1992; In the Matter of the Will of Olive Gertrude Jones 129/1977, followed.

Mortgages - Joint tenancy - Death of party - Payment by executor of amount due under mortgage - Executor also surviving joint tenant - Liability of surviving joint tenant.

Wright v Gibbons (1949) 78 CLR 31, applied.

Lyons v Lyons [1967] VR 169; Shannon's Transfer [1967] Tas SR 245; In the Estate of Coulls, Deceased [1965] SASR 317; Coulls v Bagot's Executor and Trustee Co Ltd (1969 - [1967] HCA 3; 1970) 119 CLR 460, followed.

Cochrane v Cochrane [1985] 3 NSWLR 403, considered.

Judgment Number: [2003] TASSC 63

MARCUS JOHN EDWARD CLAY, CURTIS PARTRICK ROBERT CLAY

and ANN-MARIE LOUISE CLAY by their litigation guardian

1 The originating application made by the litigation guardian on behalf of her children seeks the determination of questions arising from the will of their father, Adam John Clay. The respondents who are the grandparents of those children, are the executors and trustees appointed under the will.

"1 What were the assets and liabilities of the estate of the late Adam John Baynes Clay.

2 Does the Will of the Late Adam John Baynes Clay admitted to Probate on the 12th August, 1997 deal with the entirety of the net estate of the said Adam John Baynes Clay.

3 Who are the Trustees referred to in the said Will?

4 In so far as the Will provides for the distribution of any assets of the estate, what provision is made and, in particular:

(b) What assets are disposed of pursuant to the terms of the Will?

(c) When do the beneficiaries become entitled to their legacy?

5 Does the Will establish a discretionary trust in relation to the net estate of the said Adam John Baynes Clay for the benefit of his children?

6 What has become of the assets of the estate since the date of death?"

3 Adam Clay died on 31 May 1997, leaving three children, Marcus (born 16 April 1989), Curtis (born 17 June 1990) and Ann-Maree (born 9 May 1992). Probate was granted on 12 August 1997. The terms of the will declared to have been made on 14 March 1997, as admitted to probate, are:

I Adam John Baynes Clay of 55 Liverpool Crescent being of sound mind hereby make this my last will and testament.

As I hold everything in common with my brothers and sisters in the Order of St Basil, this leaves only the Life Insurance Policy for $535.000 at the AMP society.

I appoint my father Geoffrey Edward Clay and his wife Vera Irmgard Clay to be joint executers [sic] of my estate, all duties and powers to be inherited by the sole survivor in the advent [sic] of death. Should both executors die prior to my youngest child Ann Maree turning thirty, then an officer of the High Court be appointed until that date.

The Executors may allocate a sufficient sum to pay for essential needs including whatsoever they deem appropriate and their joint or single agreement shall be adequate discharge of my wishes.

They are also empowered to employ as many servants as they deem necessary for the day to day care of the children, provided the person or persons appointed are kind and gentle in all things.

Should any child through early marriage desire their share of the remaining funds to be divided early, this discretion shall remain solely with the Trustees. If Trustees are unable to agree then Vera Irmgard Clay [sic] decision shall be final.

4 It is clear from the terms of the will that Geoffrey Edward Clay and Vera Irmgard Clay were appointed as executors and, by necessary implication, trustees of the will, and the survivor to remain as sole trustee. In the event that both trustees die before the youngest child turns 30, then the legal consequence consistent with the intention of the testator is that this Court should appoint a trustee or trustees.

5 The power of advancement, the naming of one of the children, and provision for a child to receive his or her share early in the event of marriage, warrants the conclusion that the testator intended his children to be the beneficiaries of the will. If the testator intended Geoffrey Edward Clay and Vera Irmgard Clay to receive the whole of the bequest, there would be no need for the provision of powers of advancement or the right to a share of "the remaining funds". A reading of pars5 and 6 together warrants the conclusion that the term "their share of remaining funds to be divided equally" means that their remaining share is that remaining after the advancement of moneys for their benefit. The right to demand the share of the residue upon marriage might be subject to the approval of the trustees or Vera Clay, but such does not give a different meaning to my interpretation. The term in par4 "to pay for essential needs" does not specify "their own" or name the trustees as intended beneficiaries.

6 The children of the deceased are the intended beneficiaries.

7 The terms of the appointment of Ann-Marie as a replacement trustee, in the event of the death of both trustees, at the age of 30 and of an "officer of the High Court" if the event occurs before she attains that age, evidences an intention that the estate was to be administered by the trustees at least until 9 May 2122. Ann-Marie is the youngest so there would be nothing to administer upon her attaining that age. The power to accelerate entitlement upon early marriage is consistent with the interpretation that the testator did not intend entitlement upon each child becoming an adult, ie, at the age of 18. No other age or event giving rise to entitlement is stated in the will and the Court concludes that the intention of the testator was that each child would be entitled to receive their residual share of the bequest not before 2122.

8 However, no mention is made providing for disposition in the event of early death of any of the beneficiaries. The terms provide for an "equal share" as "their share of the remaining funds" and the normal principles of survivorship would apply. There is no "gift over" in the event of early death (In the Will of Samuel John Gray, Public Trustee v Gray B42/1992). Whether the rule in Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 115 is based on prohibition of a restriction on enjoyment or a contradiction of the terms of an absolute gift, the result is that of invalidity. A condition placed on an absolute gift is void (In re Johnston, Mills v Johnston [1894] 3 Ch 204; Harbin v Masterman [1894] 2 Ch 184; In the Matter of the Will of Olive Gertrude Jones 129/1977). A restricting condition can be imposed by giving the income to another until the ultimate beneficiary attains the designated age or with a "gift over" on death under that age. But here there is no resulting beneficiary in the event that the beneficiary attains the age of majority (or, in the terms of the will, the year 2122). The Age of Majority Act 1973, s3, stated the age of "full capacity" to be 18 years. Each of the children is entitled to an absolute gift of one third (assuming each child attains the required age) of the residue on attaining the age of 18 years.

9 The trustees are responsible for the administration of the trust according to law. They are afforded discretionary powers of advancement for the benefit of the children and to accelerate distribution upon request of a beneficiary who becomes married before the date of entitlement. No other form of discretionary trust has been created.

10 The statement "As I hold" is simply a preamble to the terms of the bequest. If it was intended to refer to a class of people, then on the material before the Court it is impossible to define the "class" and any gift ought fail. The expression used by the testator is no more than a statement explaining what property he owned which could form part of the bequest. It may be that he had in mind the property at Goulburn Street which he held as a joint tenant with his stepmother, the second respondent. The answer to the question is "that property which he legally owned at the date of death". The inventory lodged by the executors with their affidavit in support of a grant of probate made in accordance with the Administration and Probate Act 1995, lists the assets as:

11 The Government Insurance Office disputed its obligation to pay the sum of $500,000 and legal proceedings were commenced and the action settled in an amount of $70,000. This Court has no reason to believe that the settlement was, in the circumstances, other than appropriate. Allowing for an adjustment for costs and one item said to be for the welfare of the children, the total amount available to the estate from GIO is $67,126. The payment made by the AMP Society was $547,324. In addition, there were moneys in a bank account amounting to $641. No valuation has been obtained with respect to the coins or martial arts collection. The answers to questions 1 and 4(b) are:

(1) the current value of the martial arts and coin collections as referred to by the executors in the inventory;

(2) the sum of $615,091 being the proceeds of the life insurance policies and the CBA bank account.

13 On the hearing of this application, counsel for the trustees contended that a further sum of $180,000 ought be included as a liability due by the estate. The trustees have not placed affidavit material before this Court in support of this contention. Their counsel initially sought to read into evidence an affidavit of Geoffrey Edward Clay. Objection was taken to portions of the material but no ruling was given on admissibility. Notice of intended cross-examination had been given, but Mr Clay did not appear, claiming ill-health. On the resumption of the hearing, he again did not appear for cross-examination and counsel, properly instructed, appropriately did not seek to tender the affidavit. Instead, he relied on documentation placed before the Court by agreement in support of the claim.

14 The joint tenancy in Goulburn Street might explain the enigmatic commencing words of the will earlier referred to in that they were but an acknowledgement that the property was held for the benefit of the Order of St Basil through his stepmother and strengthens the basis of the conclusion already reached that the words did no more than refer to an existing state of affairs.

15 The deceased and his stepmother, Vera Clay, were joint tenants in real estate situate at Goulburn Street, Hobart, comprised in Certificate of Title, Vol 2457, folio 27. On 1 August 1995, the testator's property was mortgaged to D W Tapping Pty Ltd (ACN 051 859 682) for an amount of $180,000. The testator's interest was extinguished upon death and thereafter Vera Clay was seized of the whole of the estate. The mortgage was discharged on 15 December 1997 with the payment of capital, interest and associated disbursements and charges in the amount of $185,650. The property was sold by Vera Clay who received a settlement figure of $125,000 from which was deducted $8,856 in commission and arrears of rates in December 1998. No account has been made to the estate for any of the settlement moneys. The trustees claim that the estate was responsible for the payment of the moneys discharging the mortgage, but not entitled to the proceeds of sale.

16 The mortgage was in a common form. The primary security was that of the land and the powers of the mortgagee were primarily those exercisable against the mortgagors. No specific powers of recourse against the guarantors are stated in the mortgage, other than those specified in cls 21, 27 and 28, which relevantly provide:

"21 In the event of any breach during the currency of this Mortgage by the Mortgagor, the Borrower or the Guarantor of any of the within mentioned covenants to be observed and performed by the Mortgagor, the Borrower or the Guarantor, or if the Mortgagor, the Borrower or the Guarantor shall become bankrupt or enter into any scheme or composition with their creditors or execute any Deed or [sic] Assignment for the benefit of his creditors the Mortgagee as Mortgagee may declare by notice in writing to the Mortgagor that the principal moneys and interest thereon hereby secured have become due and owing and thereupon such moneys shall notwithstanding anything hereinbefore contained be due and including the right of foreclosure shall notwithstanding the acceptance of any moneys hereby secured after such default has been made forthwith become and be exercisable by the Mortgagee in the same manner as if the principal sum had been originally expressed herein to be payable on demand

27 The Mortgagor, the Borrower and the Guarantor shall pay to the Mortgagee on demand all reasonable legal costs and expenses including all costs as between Solicitor and Client incurred by the Mortgagee in respect of -

[i] the negotiations leading to the Mortgage, the preparation of the Mortgage and associates [sic] documents, the certification of the Mortgagor's title, the execution, stamping and registration of the Mortgage or the enforcement of any of the covenants or provisos of the Mortgage

[ii] any default on the part of the Mortgagor hereunder or incurred by the Mortgagee

[iii] the stamp duty from time to time assessed upon the Mortgage at any time before it is discharged regardless of the reason for or circumstances giving rise to the assessment or re-assessment

[iv] the delivery of any notice given pursuant to the provisions of this Mortgage or of any statute or regulation which applies to this Mortgage

[v] the recovery of any unpaid interest, insurance premiums, rates and land tax or other amounts which the Mortgagor defaults in paying in contravention of the covenants and provisos of this Mortgage

[vi] the preparation, execution, stamping and registration of any extension variation or postponement of the Mortgage

[vii] the discharge, stamping and registration of the discharge of the Mortgage

all of which costs and expenses shall from time or payment or expenditure thereof respectably [sic] until paid to the Mortgagee by the Mortgagor the Borrower and the Guarantor be deemed principal moneys covered by this Mortgage and shall carry interest at the rate of interest provided for in this Mortgage to be paid upon the principal secured hereunder

28 The Mortgagor, the Borrower and the Guarantor shall pay to the Mortgagee on demand the administrative and account costs as a consequence of or on account of each late payment of moneys due and owing by the Mortgagor under this Mortgage and any amount on any such occasion shall not exceed an amount of one and a half per cent [1.5%] of the principal sum then advanced under this Mortgage"

17 The parties to the mortgage and guarantee are defined in cl 31, which states::

"31.1 The expression 'the Mortgagor' shall mean Vera Irmgard Clay and Adam John Baynes Clay their heirs, successors, personal representatives and assigns and where the Mortgagor is a corporation, its successors and permitted assigns

31.2 The Expression 'the Borrower' shall mean The Order of St Basil Inc

31.3 The Expression 'the Guarantor' shall mean Vera Imgard [sic] Clay, Adam John Baynes Clay and Geoffrey Edward Clay

3 31.3 The expressions 'the Mortgagee' shall mean D W & I M TAPPING PTY LTD and each of their heirs, successors and personal representatives and where the Mortgagee is a corporation its successors and permitted assigns

31.4 Where two or more persons are included in the expression 'the Mortgagor', or 'the Mortgagee' the covenants on the part [whether express or implied] shall be jointly and several"

18 The contention is that since the deceased concurrently entered into a personal covenant which guaranteed the loan and indemnified the joint tenant, his interest in Goulburn Street passed by survivorship, but not his personal liability which remains a liability due by his estate. In law his interest was extinguished, leaving the surviving joint tenant exclusively entitled. As Latham CJ stated in Wright v Gibbons [1949] HCA 3; (1949) 78 CLR 313 at 323:

"If one joint tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint tenant or joint tenants is correspondingly enlarged."

19 The Land Titles Act 1980, s100, relevantly provides:

"100 - Where a person becomes entitled to an estate or interest in registered land -

(a) on the death of a person registered with him as joint proprietor of that estate or interest; or

the Recorder may, on the application of the person so entitled and proof to his satisfaction of the death or other event, as the case may require, register that person as proprietor of the estate or interest."

20 The mortgage over the property is a charge on the land and governed by the Conveyancing and Law of Property Act 1884, s30, which states:

"30 - In a deed of statutory mortgage, or of statutory transfer of mortgage, where more persons than one are expressed to convey as mortgagors or to join as covenantors, the implied covenant on their part shall be deemed to be a joint and several covenant by them; and where there are more mortgagees or more transferees than one, the implied covenant with them shall be deemed to be a covenant with them jointly, unless the amount secured is expressed to be secured to them in shares or distinct sums, in which latter case the implied covenant with them shall be deemed to be a covenant with each severally in respect of the share or distinct sum secured to him."

However, the mortgage does not operate as a transfer of land, but operates as a security and interest in the land (Land Titles Act, s73; Shannon's Transfer [1967] Tas SR 245).

21 It is possible for a joint tenant to charge the land, by way of mortgage, without severing the joint tenancy (Lyons v Lyons [1967] VR 169) and in such a case the land would remain charged with the mortgage in the proprietorship of the surviving tenant or tenants (Shannon's Transfer (supra)). Here, both tenants charged the land and the death of the testator left Vera Clay as sole proprietor of the land which remained charged. No charge remained which was personal to the deceased and any personal liability enforceable against his estate could only arise at the behest of the mortgagee under the terms of the mortgage upon default or by way of any concurrent personal guarantee. Here there is no evidence of default and no claim has been made by the mortgagee. The executors do not show the mortgage as a contingent liability of the estate in their affidavit of inventory sworn on 10 July 1997, whilst the money was paid, on their contention, from the proceeds of the estate some five months later. It is likely, but not necessary, to conclude that the death of the testator was made known to the mortgagee through its officers, with possible consequences on the continued efficacy of any personal covenant, vis-à-vis the mortgagee (Coulthart v Clemenston (1879) 5 QBD 42). Either Vera Clay was entitled to have recourse to the estate to avoid default, and there is no evidence supporting such a conclusion, or, if she had recourse, the proceeds of sale must be brought into account.

22 When a mortgagor becomes entitled to the whole fee because he or she outlives the co-owner, then the mortgagee becomes the mortgagee of the whole estate (Lyons v Lyons (supra), Corin v Patton [1990] HCA 12; (1990) 169 CLR 540). The provisions of the Administration and Probate Act 1935, s35, have no application since at the time of death the testator was neither "possessed of, or entitled to ... an interest in property ... charged with the payment of money."

23 There was no surviving equity as between the testator and the second respondent which entitled her to claim from his estate indemnity or contribution (Corin v Patton (supra), especially Deane J at 573 - 583). Any rights of subrogation or equity are subsumed by the entitlement of the survivor to the whole of the interest in the land. As Kearney J concluded in Cochrane v Cochrane [1985] 3 NSWLR 403 at 405:

"... I am unable to accept that the doctrine of subrogation applies to the case of repayment of a mortgage debt by a co-mortgagor in the absence of a very clear reservation expressly or impliedly of such right. Each co-mortgagor being primarily liable for the whole debt, adequate justice is done between them if one has to pay the whole debt, by his entitlement to contribution. This is reinforced where the non-paying co-mortgagor is insolvent, [or by analogy death - my interpolation] and to give the paying co-mortgagor the added right of subrogation could have the effect of constituting him a second creditor to the detriment of other creditors in the insolvency. Equity recognises the vital difference in cases of suretyship or assignment of leases, that although the liability is co-existent, the ultimate liability rests upon the principal debtor in the one case and upon the assignee being the current lessee in the other. The implied indemnity inherent in such relationships and creating the equity calling for subrogation does not exist in the relationship between co-mortgagors."

The position is complicated by her being both the surviving tenant and executor of the estate. She made no enquiry of this Court and simply had recourse to the estate as if it were her own.

24 In In the Estate of Coulls, Deceased [1965] SASR 317, Mayo J was required to consider the right of an executor to claim contribution or indemnity from the widow for money paid in discharge of mortgages charged on property jointly held by herself and her deceased husband. Upon the death of the husband, the executor had paid the sum due following the commencement of legal proceedings by the mortgagee and in the action sought, by third party proceedings, to recover the money from the widow. As of the date of the proceedings, the widow had not sought registration of her title as required by the Real Property Act 1886 - 1963 (SA), s188 (comparable to the Land Titles Act, s100), and so, in the words of Mayo J at 325:

"... his estate and interest is not, as yet, shown to have ceased by the title. The executor, as such, became by the terms of the mortgages, a mortgagor, jointly and severally, with the widow."

25 The evidence in this case does not indicate whether there had been registration in accordance with the Land Titles Act before the date of discharge. If it had been registered some time before the arrangement for "settlement", it would strengthen the basis of the conclusion already reached. If registration was concurrent with discharge then, nevertheless the rights of the mortgage would have been extinguished before payment was made by the second respondent.

26 In Coulls the court was dealing with the executor as if he were a co-mortgagor and dealt with the issues of joint covenants in the following terms, at 326 - 327:

"If the executor is entitled to exercise the rights of the mortgagees against the widow, she will have the concurrent right to treat the executor as a joint and several covenantor liable with her. It can surely have no right that would not have been in her husband during his life, had he discharged the liabilities and taken a transfer of the instruments. The rights and liabilities of persons, who have contracted with third parties, as did the deceased and his wife, between themselves, depend on the terms of the agreement inter se in pursuance of which they have joined in the contract. Where two persons join in contracting a debt or debts for the benefit of both, each of them will by the contract be liable for the total sum to the creditor, but inter se the presumption will be that they contribute rateably, and on the death of one the executor of the other will remain liable in the same category: Prior v Hembrow and Dare [1841] EngR 924; (1841) 8 M & W 873, at p 889 [1841] EngR 924; (151 ER 1294, at p 1301). Other authorities, having some reference to the principle, are: Burnell v Minot (1820) 4 Moo CP 340); Reynolds v Wheeler [1861] EngR 706; (1861) 10 CB (NS) 561 (142 ER 572) (1883 ) 8 App Cas 733_); Shepheard v Bray_ (1906 ) 2 Ch 235.

So far as rights inter se between persons who are joint and several covenators are concerned, the same depend upon agreement express or implied between them. If there is no agreement entered into, then the presumption will be that the liability will be rateable. But that will not be implied in the case of wives. Arrangements between husband and wife do not necessarily constitute a contract: Balfour v Balfour (1919 ) 2 KB 571_._ No express agreement was proved between husband and wife concerning payment of principal and interest. No evidence carries any suggestion that he expected her to contribute. Where, as here, a husband is concerned in steps leading up to a purchase of land, at the outset paying for the purchase in part, and thereafter attempting to find the balance of the purchase price to complete the purchase, a presumption is implicit as between husband and wife that he will not look to her for contribution: Halsbury's Laws of England 3rd ed vol 19, p 832, par 1360. In the absence of specific agreement there is no inference to be drawn that she will so contribute eg Wirth v Wirth (1956 ) [1956] HCA 71; 98 CLR 228. Her inclusion, as a covenanting party, is to be treated as following the requirement of the mortgagees, who would not be content, as previously mentioned, to omit a covenant by either of joint proprietors. No ground for regarding her inclusion as being at solicitation or request of the deceased has been disclosed.

Thus so far as there being any inference of a contract by the wife to contribute, the data indicates the contrary. The conduct of the deceased husband after the purchase precludes implication of her liability to him or to his estate.

My conclusion is that the executor has no right of recovery against the widow. The claims in the two proceedings against her relative to the mortgages will be dismissed."

27 The approach taken by Mayo J was upheld by the High Court in the ensuing appeal (Coulls v Bagot's Executor and Trustee Co Ltd (1969 - [1967] HCA 3; 1970) 119 CLR 460). The specific question relevant to these proceedings was stated by Barwick CJ at 470 in the following terms:

"(3) What liability, if any, of the respondent to the executor arose upon the recovery of judgment by the mortgagees against the appellant executor, by reason of (a) the respondent having joined with her husband in the personal covenants of the mortgages; (b) her entitlement by survivorship upon his death to the sole proprietorship of the property 'Hillcrest'."

In relation to that question, Barwick CJ concluded, at 480:

"So far as the claims of the executor that the respondent indemnify or make contribution are concerned, I have found little difficulty. The basis of these claims is, as to contribution, that the deceased and the respondent were joint debtors between whom there is generally a right of contribution, and as to indemnity, that the respondent has become absolutely and beneficially entitled to the property upon which the mortgage debts were charged. But these claims are simply answered by either of two cognate arguments. The deceased bought the house. It was not as was the case in McMillan v National Trust Co (1931) 2 DLR 369 upon which the executor's counsel set considerable store, a commercial purchase by husband and wife to which each made a separate financial contribution. It was bought by the husband and conveyed into the joint names of the two of them by way of advancement to the wife as to her joint interest in the land. Apart from any presumption, which of itself would be enough, the intention so to do is manifest in the evidence. The subject matter of the advancement was not, in my opinion, an equity but clearly a freehold : cf per Warrington J in Dunbar v Dunbar (1909) 2 Ch 639, at p 646 . So to conclude denies any right to contribution or indemnity by the respondent in respect of the mortgage debts. Alternatively, it can properly be said that the borrowing of money upon the security of the land was to provide the deceased with the purchase money for the property. It was not borrowed for them both but for him alone. The signature of the mortgage, including its personal covenant, was not intended by the parties to create any right of contribution or indemnity. The learned primary judge was right to dismiss the third party proceedings."

28 In their consideration of the same issue, Taylor and Owen JJ stated, at 488:

"These are appeals from third party proceedings in the Supreme Court in which the executor of the will of the testator sought to recover from the testator's widow two separate sums of money as and for indemnities in respect of moneys paid after the death of the testator in discharge of two mortgages over a house property near Adelaide. The property was bought at auction and title was taken in the joint names of the testator and his wife. The mortgages in question were given on 4th May 1960 by the testator and his wife jointly and were for the amounts respectively of 10,300 pounds and 3,800 pounds, the proceeds being applied in payment of the purchase money for the property. The purchase price was 21,200 pounds and the balance of the purchase money was paid by the testator out of his own funds. There is, of course, no doubt that both the executor of the will and the wife of the testator were as between the mortgagees and themselves, bound to repay the principal moneys. But whether a right to an indemnity or to a contribution accrues to one of two joint mortgagors upon repayment of the principal sum by one of them depends upon the implication of a contractual obligation or arises in some other way In re a Debtor (1937) 1 Ch 156 ; Re Salisbury-Jones (1938) 3 All ER 459 ; and Anson v Anson (1953) 1 QB 636 it seems that no such right will arise where such a result would clearly be contrary to the intentions of the parties at the time when the joint obligation was undertaken (Dunbar v Dunbar (1909) 2 Ch 639, at p 646 ). In the present case there is evidence, which the learned judge of first instance appears to have accepted without question - and which there is no reason to doubt - that the house was bought by the testator expressly as a new and 'better' home for himself and his wife during their joint lives, that he had planned to sell the 'Highbury East house' to finance the purchase, that, having failed in this, he had sought an overdraft from his bankers, that on the completion of the contract he gave his own cheque for the deposit and that the two mortgages in question were given in order, temporarily, to enable him to complete the purchase and, further, that at the time of the purchase he announced, in effect, that he was buying the home for his wife. In these circumstances we can see no grounds upon which it can be asserted that the appellant is on any basis entitled either to contribution or a complete indemnity from the respondent."

29 This is not such a case. The testator and his stepmother entered into a mortgage which declared the Order of St Basil to be the borrower. They had agreed to act as guarantors together with the first respondent. The guarantees were provided to a third party not as between themselves. Though the guarantees were joint and several, they did not constitute an intention that in the event of death the survivor ought have a benefit from the estate of the other. There was no such implication apparent from the terms of the mortgage agreement.

30 No interest in property survived the testator's death. The mutual guarantees provided for in the mortgage document related to the obligations to the mortgagee. The personal guarantee to the mortgagee operated only in the event of loss remaining after recourse to the mortgagee's right of sale. In this case, the liability of the guarantors was joint and several and whilst the death of one will not discharge the obligation of the remaining other, the estate of the deceased is released at least as against the co-guarantors (Beckett & Co v Addyman (1882) 9 QBD 783, see generally, Coulthart v Clemenston (supra).

31 The conclusion reached is that the sum of $180,000 does not constitute a liability owed by the estate. Even if that conclusion be incorrect, the result would be similar. The second respondent would be required to bring into the account of the estate the proceeds of sale as an asset. That question will be addressed on the resumption of this hearing and following the provision of the accounts (In re Joseph (supra)).

32 The Court made an order on 24 June 2003 pursuant to the Supreme Court Rules 2000, r604(3)(b)(i) that the trustees be directed to "furnish and verify accounts".

33 The Court will await the provision of a statement of account before answering this question and the further hearing of the application will be adjourned sine die.

Answers to the questions referred by the applicants

"1 What were the assets and liabilities of the estate of the late Adam John Baynes Clay.

2 Does the Will of the Late Adam John Baynes Clay admitted to Probate on the 12th August, 1997 deal with the entirety of the net estate of the said Adam John Baynes Clay.

3 Who are the Trustees referred to in the said Will?

4 In so far as the Will provides for the distribution of any assets of the estate, what provision is made and, in particular:

(b) What assets are disposed of pursuant to the terms of the Will?

(c) When do the beneficiaries become entitled to their legacy?

(c) Upon each of the named beneficiaries attaining the age of 18

5 Does the Will establish a discretionary trust in relation to the net estate of the said Adam John Baynes Clay for the benefit of his children?

6 What has become of the assets of the estate since the date of death?"

To await the provision of accounts in accordance with the order made on 24 June 2003