Donnolley v Clarke

Supreme Court of NSW|2008-05-06|Before: White J, Hodgson J, Holland J

CITATION : Donnolley v Clarke [2008] NSWSC 522

DECISION : See paras 41-43 of judgment.

CATCHWORDS : SUCCESSION - Wills - Rectification - Principles for effecting rectification - Standard of proof - Clear and convincing proof of actual intention needed - SUCCESSION - Wills - Construction of will - Inconsistent gifts - Same property given to different beneficiaries in different clauses of will - Testator presumed to have intended both gifts to take effect - Each beneficiary takes a moiety - COSTS - Wills, Probate and Administration - Construction of will - Both parties partially successful - Whether costs should be borne out of disputed property or residue - Testator failed to make his intention clear - Costs to be borne out of residue

LEGISLATION CITED : Wills Probate and Administration Act 1898 (NSW) Civil Procedure Act 2005 (NSW)

Rawack v Spicer [2002] NSWSC 849 Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18 Gallagher v Adams (1887) 13 VLR 948 In re Potter's Will Trust (1944) Ch 70 Re Hammond; Hammond v Treharne [1938] 3 All ER 308 Doe d Leicester v Biggs [1803-1813] All ER 546 Sherratt v Bentley (1833-1834) 2 MY&K 149; 39 ER 901 In re Bagshaw's Trusts (1877) 46 LJ Ch 567 CASES CITED : In the Estate of Lupton [1905] P 321 Gravenor v Watkins (1870-1871) LR 6 CP 500 In re Ridgeway; Sutherland v Ridgeway (1900) 26 VLR 254 Ridout v Pain (1747) 3 Atk 486; 26 ER 1080 Anonymous Cro Eliz 9; 78 ER 275 Wallop v Darby Yel 209; 80 ER 137 Re Alexander's Will Trust [1948] 2 All ER 111 Taylor v Haygarth (Supreme Court of New South Wales, Hodgson J, 7 October 1994, unreported) The Estate of Davis (Supreme Court of New South Wales, Hodgson J, 28 July 1995, unreported) Re Barden; Florence v Shekelton-Bardon (Supreme Court of New South Wales, Holland J, 19 December 1983, unreported)

JGR Marty, S Bridge and M Oldham, Theobald on Wills, 16th ed (2001) Sweet & Maxwell TEXTS CITED : R Jennings, Jarman on Wills, 8th ed (1951) Sweet & Maxwell D M Haines, Construction of Wills in Australia (2007) LexisNexis Butterworths Mason & Handler, Succession Law & Practice (looseleaf) LexisNexis Butterworths

Terrence William Donnolley & Anor PARTIES : v Michael John Clarke Estate of Kenneth John Wisemantel

COUNSEL : Plaintiffs: J Armfield Defendant: R Colquhoun

SOLICITORS : Plaintiffs: W H Parsons & Associates Defendant: Paul Couch & Associates

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

103911/07 Terrence William Donnolley & Anor v Michael John Clarke Estate of Kenneth John Wisemantel JUDGMENT 1 HIS HONOUR: This is an application for rectification of the will of the late Kenneth John Wisemantel, or for declarations as to the proper construction of his will. Mr Wisemantel died on 16 September 2005, aged 75. He owned a dairy farm known as Avalon Park at Krambach near Taree, New South Wales. He was unmarried and had no children. 2 His last will was made on 3 October 2002. He appointed the plaintiffs his executors and left them 13 specified individual parcels of land which together made up the farm. One of those parcels is portion 196 in the Parish of Wollom. The plaintiffs were also the residuary beneficiaries. The plaintiffs are a nephew and niece of the deceased. In a later clause of the will the deceased left portion 196 to Mr Michael Clarke. Mr Clarke is a great nephew of the deceased. 3 The plaintiffs seek an order for rectification of the will to delete the gift to Mr Clarke. They contend that the deceased intended that they should inherit all of the farm. Alternatively, the plaintiffs say that as a matter of construction the will discloses a scheme for them to inherit the farm and the gift to Mr Clarke should be rejected as repugnant to the overall intention of the testator as disclosed in the will.

4 Mr Clarke contends that his gift, which is later in the will to the gift of portion 196 to the plaintiffs, is repugnant to the gift of that portion to the plaintiffs. Counsel for Mr Clarke submits that his later gift prevails on the basis of a general rule of construction that where there are inconsistent clauses in a will the last clause prevails over the earlier inconsistent clause. 5 Another possibility is that portion 196 is inherited by the plaintiffs and Mr Clarke as tenants in common, either in equal one third shares or as to 50 percent by the plaintiffs as tenants in common in equal shares and as to 50 percent by Mr Clarke. No one contends that the gift of portion 196 is void for uncertainty such that it passes under the residuary clause or on intestacy. 6 Subsection 29A(1) of the Wills Probate and Administration Act 1898 (NSW) provided: " 29A (1) If the Court is satisfied that a will is so expressed that it fails to carry out the testator's intentions, it may order that the will be rectified so as to carry out the testator's intentions ." 7 Both parties accepted the statements by Campbell J (as his Honour then was) in Rawack v Spicer [2002] NSWSC 849 at [25]-[31] as setting out the relevant principles for rectification of a will. Relevantly, for the Court to rectify the will, not only must the Court be satisfied that the will as expressed fails to carry out the testator's intentions, but it must be shown by clear and convincing proof how the testator intended to dispose of his property. 8 The deceased made an earlier will in 1999. It was prepared by Mr Bryan Baker of Baker & Borthwick solicitors. By his 1999 will the deceased appointed his nephews, Rowley Wisemantel and the first plaintiff, Terrence Donnolley, as his executors and trustees. In that will he left his household furniture and personal motorcar to two sisters, Constance Enwright and Margaret Donnolley. He directed his trustees to permit a friend, Shirley Moore, to operate the dairy farm for 12 months and to retain the profits therefrom. In that will he devised the farm in three ways: certain lands were given to Rowley Wisemantel; portions 61, 134 and 195 in the parish of Wollom were left to Terrence Donnolley; and portion 196 was left to Michael Clarke, subject to the gift to Shirley Moore for 12 months. The residuary estate was given to Rowley Wisemantel and Terrence Donnolley. 9 In September 2002, the deceased retained Mr Baker to make a new will. He told Mr Baker that "family matters" had arisen, but did not explain what they were. Mr Baker has no specific recollection of the deceased's instructions except that the deceased gave him a copy of the 1999 will which the deceased had amended by hand. Mr Baker had his secretary type up a new will, incorporating the changes. That will was proofread by Mr Baker, probably from his computer screen. A copy was provided to the deceased for his perusal before being signed. The will was not read aloud to the deceased, but I am satisfied that the deceased read the will before he signed it. 10 The will removes Mr Rowley Wisemantel as an executor, trustee and beneficiary. The deceased's household furniture and personal motorcar were left to Margaret Donnolley alone. She is the mother of the plaintiffs. An inconsequential change was made to the gift to Shirley Moore. The will then included the following clauses: " 3 I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal of whatsoever kind and wheresoever situate to my Trustees UPON TRUST as follows: ... (c) IF I stand possessed at the date of my death of lands and improvements being Portions 22 and 27 in the Parish of Wollom and Lots 34 and 125 in the Parish of Wollom and the closed road comprised in Land Grant Volume 2637 Folio 239, and Lots 7, 14, 15 and 18 in DP 722736, or any part thereof, AND if I stand possessed of land and improvements being Portions 61, 134, 195 and 196 (or any part thereof) in the Parish of Wollom, at the date of my death, THEN IN THAT EVENT I GIVE DEVISE AND BEQUEATH those said lands to my nephew TERRANCE WILLIAM DONNLLEY [sic] and the said ANNE MARGARET LARK as tenants in common in equal shares. (d) IF I stand possessed at the date of my death of land and improvements being Portion 196 in the Parish of Wollom THEN IN THAT EVENT I GIVE DEVISE AND BEQUEATH that said land to my nephew MICHAEL JOHN CLARKE absolutely. ... (g) IF I stand possessed at the date of my death of farm machinery [but subject to the bequest to the said SHIRLEY DAWN MOORE for the term of twelve (12) months as herein provided in Clause 3(b)] THEN IN THAT EVENT I direct that my Trustees shall treat that said farm machinery as part of my residuary estate. (h) AS to the rest and residue of my estate of whatsoever kind and wheresoever situate to my said nephew, TERENCE WILLIAM DONNOLLEY [sic] and the said ANNE MARGARET LARK equally, as tenants in common in equal shares BUT CHARGED with payment of all my just debts, funeral, testamentary and administrative expenses and liabilities and all death and estate duties payable in respect of my estate and every part thereof. " 11 Mr Baker did not recall any specific instructions in relation to the devise of portion 196 which, by cl 3(c), was left to the plaintiffs as tenants in common in equal shares and, by cl 3(d), was left to Mr Clarke. The deceased's handwritten changes to the 1999 will, on the basis of which the 2002 will was drawn, were disposed of, along with the original 1999 will, after the 2002 will was signed. 12 Portion 196 is the most easterly of the lots which make up the Avalon Park farm. It is contiguous to portion 195. It has its own road access to Avalon Road. Portion 195 also abuts Avalon Road and there is road access to each of the other lots comprising the farm without traversing portion 196. 13 It is clear that the deceased intended the plaintiffs have at least the bulk of the farm. The devise of portion 196 to Mr Clarke is not necessarily inconsistent with that intention. The plaintiffs can enjoy the rest of the farm perfectly well even if Mr Clarke is entitled to portion 196. 14 In his last will the farm machinery was left to the plaintiffs after 12 months. It was common ground that none of the farm machinery was stored on portion 196. The fact that the plaintiffs were left the farm machinery does not throw light on the question as to whether the deceased intended that they, or Mr Clarke, or all of them, inherit portion 196. 15 Both the plaintiffs and Mr Clarke and their mothers had close relationships with the deceased up to his death. They could all be regarded as natural objects of the deceased's bounty. That is to say, the plaintiffs' relationship with the deceased was such that it would be perfectly understandable if the deceased decided to leave the whole of the farm to them. By the same token, Mr Clarke's relationship with the deceased was such that it would be perfectly understandable if the deceased had intended to leave the whole of portion 196 to Mr Clarke, as he had done in the 1999 will. There is no evidence that the "family matters" which prompted the deceased to change his will related to the conduct of Mr Clarke. 16 Mr Armfield of counsel, who appeared for the plaintiffs, submitted that the changes to the 1999 will showed that the deceased intended to leave the whole of the farm to the plaintiffs. He submitted that it should be inferred that the deceased's changes to the 1999 will were accurately transcribed by Mr Baker's secretary and showed that the deceased intended the plaintiffs to have all of the farm and farm machinery. He submitted that it should be inferred the deceased overlooked the fact that he had failed to delete the gift of portion 196 to Mr Clarke. He submitted that the provisions in the will were inconsistent, but in light of the deceased's clear intention that the plaintiffs receive all of the farm, the gift in favour of Mr Clarke should be deleted to give effect to that intention. 17 I do not consider that the evidence clearly establishes that the deceased intended to leave all of the farm, including portion 196, to the plaintiffs alone. That he intended the plaintiffs to have the farm buildings and machinery and, at least, the bulk of the acreage is clear. It can also be inferred that he made handwritten changes to the 1999 will to give the plaintiffs all of the lots making up the farm. However, it can equally be inferred that the deceased decided not to revoke the gift of portion 196 to Mr Clarke. To conclude that the deceased intended to revoke the gift to Mr Clarke but failed to do so assumes that either:

(a) the deceased deleted the previous clause 3(e) in the 1999 will, that is the gift to Mr Clarke in the 1999 will, but Mr Baker's secretary failed to incorporate that deletion in the 2002 will and the error was not detected either by Mr Baker or the deceased; or

(b) the deceased overlooked deleting the previous cl 3(e) when he made the handwritten changes and again failed to notice the presence of the clause, now cl 3(d), in the 2002 will. 18 It is hard to see how the presence of cl 3(d) in the 2002 will could be overlooked. It would be easier to overlook the words "and 196" in the gift to the plaintiffs in cl 3(c) than to overlook an entire clause. Moreover, as Mr Colquhoun, who appeared for Mr Clarke, submitted, if the deceased's intention was to leave the whole of the farm to the plaintiffs, that could have been done quite simply by referring to "the farm" without referring to the individual portion or lot numbers. 19 Far from there being clear and convincing evidence as to the deceased's subjective intentions, I cannot say whether the deceased's actual intention was to leave the whole farm, including portion 196, to the plaintiffs, or to leave portion 196 to Mr Clarke, or to leave portion 196 to both the plaintiffs and Mr Clarke. Accordingly, the claim for rectification will be dismissed. Construction of Clauses 3(c) and 3(d) 20 I turn to the questions of construction. Mr Armfield submitted that in construing the 2002 will the Court was entitled to have regard to the evidence of all material facts and circumstances known to the deceased, including the 1999 will. He submitted that the deceased had evinced an intention to establish a general scheme to leave the farm to the plaintiffs and the will should be construed to give effect to that intention (Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18 at 33). 21 The evidence that the deceased intended such a scheme was the terms of the gift to the plaintiffs, which included the whole farm, and the changes from the 1999 will which not only give the plaintiffs all of the land and portions comprising the farm, but also all the farm machinery. However, this construction assumes what it seeks to prove, namely, that the deceased intended to leave the whole farm to the plaintiffs alone. That contention is only correct if one disregards the gift of portion 196 to Mr Clarke. When account is taken of that gift it cannot be concluded that the deceased had a scheme to leave the whole of the farm to the plaintiffs. 22 Mr Colquhoun submitted that there was a mistake in the will and cll 3(c) and 3(d) were inconsistent insofar as portion 196 is concerned. He submitted that where there were inconsistent clauses in a will, the latter clause prevails over the earlier and cited Gallagher v Adams (1887) 13 VLR 948 at 955; In re Potter's Will Trust (1944) Ch 70 at 77; Re Hammond; Hammond v Treharne [1938] 3 All ER 308 at 308-9; and Doe d Leicester v Biggs [1803-1813] All ER 546 at 548. 23 It was not disputed that there is such a rule as a matter of last resort where there are inconsistent clauses in a will. However, in endeavouring to ascertain the testator's intention as expressed in the will the Court endeavours to give effect to all of the terms of the will. Authority suggests that where property is left by a will to A and then the same property is left to B, rather than the gift to B prevailing as being a later inconsistent gift, A and B take as tenants in common or joint tenants. 24 In Sherratt v Bentley (1833-1834) 2 MY&K 149; 39 ER 901, Lord Brougham LC said (at 165-166; 907): " It must then be admitted that the great weight of authority, both of Lord Coke and of the modern decisions, is in favour of regarding a subsequent gift in a will as revoking a prior one to which it is repugnant, and not rendering it all void for uncertainty. How far that repugnancy could be got rid of by presuming an intention to give each legatee an equal moiety, where the very same thing is given first to one and then to another, there being no expressions excluding such intention, might be a different question ... If in one part of a will an estate is given to A, and afterwards the testator gives the same estate to B, adding words of exclusion, as 'not to A,' the repugnance would be complete, and the rule would apply. But if the same thing be given first to A and then to B, unless it be some indivisible chattel, as in the case which Lord Hardwicke puts in Ulrich v Litchfield [(1742) 2 Atk 373; 26 ER 625] , the two legatees may take together without any violence to the construction. It seems, therefore, by no means inconsistent with the rule as laid down by Lord Coke, and recognized by the authorities, that a subsequent gift, entirely and irreconcilably repugnant to a former gift of the same thing, shall abrogate and revoke it, if it be also held that, where the same thing is given or [scil to] two different persons in different parts of the same instrument, each may take a moiety; though, had the second gift been in a subsequent will, it would, I apprehend, work a revocation ."

25 This was obiter. In Sherratt v Bentley there was a gift in absolute terms to the testator's wife, but in subsequent clauses there were gifts said to take effect on the wife's death. It was held that, reading the will as a whole and notwithstanding the original gift of a fee simple, the wife took only a life estate. There are several similar decisions in which Sherratt v Bentley has been applied (for example In re Bagshaw's Trusts (1877) 46 LJ Ch 567; In the Estate of Lupton [1905] P 321; Gravenor v Watkins (1870-1871) LR 6 CP 500; and In re Ridgeway; Sutherland v Ridgeway (1900) 26 VLR 254). 26 In Gravenor v Watkins, Bovill CJ said (at 504-505): " It is extremely difficult to construe one will by the light of decisions upon other wills framed in difficult language. The Court must in each case endeavour to ascertain the meaning of the testator from the language he has used. If there are two devises which are entirely repugnant and irreconcileable, in some cases (extreme ones no doubt they must be) both must be rejected. But, in order to prevent the intention of the testator from being entirely defeated, effect is sometimes given to the later devise. Sometimes effect is given to both devises, as, where the same estate is given to two different persons in two different parts of the will; in such a case it has been held that both may take as tenants in common, or, if they be husband and wife, possibly they may take as tenants by entirety. So, effect may be given to two apparently contradictory devises by restricting one or other of them to an estate for life, instead of a fee. But the precise effect to be given to the will where there are apparently conflicting devises must in all cases depend upon the intention to be collected from the language of the will itself; and effect must, if possible, be given to every part of the instrument." 27 The authorities to which Lord Brougham LC referred in Sherratt v Bentley included statements, also obiter, of Lord Hardwicke LC in Ridout v Pain (1747) 3 Atk 486; 26 ER 1080, where his Lordship said (at 493, 1084): " The law presumes that a testator even in making his will may vary his intention; as suppose a man gives a farm in Dale to A and his heirs in one part of the will, and in another to B and his heirs, it has been held by the old books to be a revocation; but latterly construed either a joint tenancy or tenancy in common, according to the limitation. ( Vide Ulrich v Litchfield , 2 Atk 373.) "

28 Statements to the same effect are found in older authorities (see Anonymous Cro Eliz 9; 78 ER 275; Wallop v Darby Yel 209; 80 ER 137). 29 Sherratt v Bentley was applied by Roxburgh J in Re Alexander's Will Trust [1948] 2 All ER 111. That case concerned a gift of the same diamond bracelet to two ladies in different clauses of the will. Roxburgh J applied the dictum of Lord Brougham LC in Sherratt v Bentley cited above and held that each lady should take a moiety of the bracelet. 30 None of the cases cited by Mr Colquhoun in support of the proposition that the later clause prevailed over the earlier clause addressed the question whether successive devisees of the same property in a will are to be taken as inconsistent or should be reconciled, thereby giving effect to all of the testator's words, by giving a moiety to each devisee. 31 The text writers treat what was said in Sherratt v Bentley as correct (see JGR Marty, S Bridge and M Oldham, Theobald on Wills, 16th ed (2001) Sweet & Maxwell at [54-10]; R Jennings, Jarman on Wills, 8th ed (1951) Sweet & Maxwell at 582-584; D M Haines, Construction of Wills in Australia (2007) LexisNexis Butterworths at [3.12]). 32 The claims for rectification by deleting one or other of the gifts of portion 196 having failed, and to save the gifts from being void for uncertainty, effect should be given to the whole of the testator's words by presuming from the fact that he made two gifts of the same property, that he intended both gifts to take effect. I conclude that the gifts of portion 196 in cll 3(c) and 3(d) both take effect, with the respective devisees to take as tenants in common. 33 There was little argument about the construction of the will in that event, that is as to whether portion 196 should be held in equal one-third shares or 50 percent for Mr Michael Clarke and 50 percent for the plaintiffs. The better construction of the two clauses is that the devisees under cl 3(c), (the plaintiffs), take a 50 percent interest as tenants in common with Mr Clarke (the devisee under cl 3(d)). As between themselves, the plaintiffs each take a 50 percent interest as tenants in common in their 50 percent interest in portion 196. 34 I will therefore declare that on the true construction of the deceased's will, Michael John Clarke is entitled, as tenant in common with the plaintiffs, to a 50 percent share of portion 196 in the Parish of Wollom and the plaintiffs, as between themselves, are entitled to share equally as tenants in common in the remaining 50 percent share of portion 196. 35 I turn to the question of costs. Both parties submitted that Mr Baker, who drew the will, should pay the costs of the proceedings which they said would not have been incurred had the will been carefully drawn so as to make the deceased's intentions clear. Mr Colquhoun cited Taylor v Haygarth (Supreme Court of New South Wales, Hodgson J, 7 October 1994, unreported) and The Estate of Davis (Supreme Court of New South Wales, Hodgson J, 28 July 1995, unreported) where Hodgson J ordered solicitors, who were executors, to pay the costs of rectification occasioned by the solicitor's negligence in drawing the will. In both the cases cited the solicitor was a party to the proceedings. 36 The power to order costs against Mr Baker, who is not a party to the proceedings, was said to arise either under s 99 of the Civil Procedure Act 2005 (NSW) or pursuant to s 98 of the Civil Procedure Act, coupled with r 42.3(g) of the Uniform Civil Procedure Rules 2005 (NSW). Notice of this application was only given to Mr Baker on Friday and I indicated that I would allow him time to deal with that application. This morning I have given directions in relation to that application. However, I think it appropriate to deal with questions of costs as between the parties, leaving aside the parties' applications that they be indemnified in respect of costs by Mr Baker. 37 The question then argued was whether both parties' costs should be paid out of the estate or out of portion 196. The plaintiffs submitted that, as they are the residuary beneficiaries, an order that the costs of Mr Clarke be paid from the estate would be unfair and that whilst it was reasonable for both parties to litigate to clarify the meaning of the will and to attempt to ascertain the deceased's actual intentions, the costs of that exercise should be borne out of the property in dispute. 38 The first principle is that costs usually follow the event. In the present case both parties have been partially successful. In probate matters, there are recognized exceptions to this general principle including (Re Barden; Florence v Shekelton-Bardon (Supreme Court of New South Wales, Holland J, 19 December 1983, unreported); Mason & Handler, Succession Law & Practice (looseleaf) LexisNexis Butterworths at [13,005]): " The two main principles of exception are:

(1) If a person who makes a will or is interested in the residue has by his conduct caused the litigation to occur, the costs of a party unsuccessfully contesting the will may be ordered out of the estate.

(2) If the circumstances reasonably called for an investigation to be made before the court could properly pronounce in favour of the will, then the contesting party who fails ought not to be required to pay costs and should be left to bear his own."

39 Here, of course, the defendant has been partially successful. In my view, the testator has caused the litigation by failing to make his intentions clear. In principle, and subject to any order that may be made against Mr Baker, costs should be paid from the estate: the costs of the plaintiffs on the indemnity basis and the costs of Mr Clarke on the party/party basis. 40 The plaintiffs will bear the burden of the costs order only because they are in the happy position of being the residuary beneficiaries. The costs occasioned by the testator's failure, or his solicitor's failure, to make his intentions clear, are costs which, by the will, are charged on the residuary estate. I see no injustice in their being borne by the residuary estate. I express no views as to whether the plaintiffs should be indemnified in respect of such costs by the solicitor, either pursuant to special costs orders which have been sought, or in a claim for damages. 41 For these reasons, I order that the orders sought in para 2 of the summons be refused. I declare that on the true construction of the will dated 3 October 2002 of Kenneth John Wisemantel, Michael John Clarke is entitled, as tenant in common with the plaintiffs, to a 50 percent share of portion 196 in the Parish of Wollom and the plaintiffs, as between themselves, are entitled to share equally as tenants in common in the remaining 50 percent share of the said portion 196. 42 I order that the costs of the plaintiffs on the indemnity basis and the costs of Michael John Clarke on the party and party basis be paid out of the estate. 43 The exhibits may be returned after 28 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Wills Probate and Administration Act 1898(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (20 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (2)

Cited By (1)