DUBOIS v HODGSON

-1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

001510/99 - EDWARD GEORGE DUBOIS v ISABELLA HODGSON & 3 ORS

1 MASTER:. This is the hearing of an application brought for construction of a will of the late John Smyth. It is probably convenient to firstly mention the beneficiaries who take under that will in order to put into context the matters that I have to deal with later. 2 The will was made on 4 September 1990. Iolanda Hoare, who I will refer to as Iolanda, is the second defendant. She is the plaintiff in other proceedings which are before me for hearing in which she seeks an order under the Family Provisions Act. She in these proceedings deposes to the fact that she lived with the deceased in a de facto relationship which commenced in the mid to late 1960s and continued up until the time the deceased was admitted to hospital in 1990. 3 Yvonne Hoare, who I will refer to as Yvonne, is the third defendant. She is the daughter of Iolanda. She is not suggesting that she is a member of the deceased household or dependant upon the deceased. 4 Isabella Hoare, who I will refer to as Isabella, is the first defendant. In the Family Provision Act proceedings she deposes to the fact that she and the deceased lived in a de facto relationship from a period commencing about May 1989 up until the deceased's death. 5 The plaintiff in the proceedings, Edward George Dubois, is the executor of the will. He was also a friend the deceased, having met him in November 1986 when he and the deceased operated businesses in adjoining joining premises. 6 Tony Drieman, who I will refer to as Mr Drieman, was a friend of the deceased. He rented a property known as 34 Pacific Highway, Mooney Mooney from the deceased prior to the death of the deceased. Mr Drieman survived the deceased but died himself on 6 June, 1997. 7 The fourth defendant is the executor of the last will of Mr Drieman and is the beneficiary under that will of any estate or interest which Drieman is found to have had as at the date of his death in the Mooney Mooney property. 8 Alexander Filby is the half brother of the deceased. He is not a party to the proceedings but Mr Filby and the deceased, until the death of Mr Filby on 13 May 1989 were the owners as joint tenants of a property known as 7 Walker Place, Church Point (the Church Point property) and certain shares and money on deposit. 9 As I mentioned, he predeceased the deceased and some of the assets which were jointly owned with the deceased passed to him by virtue of survivorship. There were other assets which he had with Mr Filby and those assets pass to the deceased. 10 No application for probate of Mr Filby's will was made by the deceased in his lifetime and the plaintiff, as the legal representative of the deceased, obtained a grant of probate of Mr Filby's will upon the death of the deceased. 11 I will mention for the record, because it will be useful, the assets of the deceased at the date of death. He owned a number of pieces of real estate, namely, 7 Walker Place, Church Point. That is the jointly owned property to which I have referred. There is the property at 34 Pacific Highway, Mooney Mooney to which I have also referred. Another property was 7 Helen Street, Sefton, to which I shall refer as the Helen Street property. There was also 42, 44, 46 and 48 Neill Street, Harden, known as the Harden shops. He held a property at 146 Neill Street, Murrumburrah and another one at 27 Neill Street, Harden. Two other properties were held. One was 96 Waldron Road, Chester Hill and another at 344 Albury Street, Murrumburrah. 12 He had money on deposit of some $15,000 and shares in companies of just under $30,000. He had two motor vehicles and an interest in the estate of his stepbrother, Mr Filby. 13 The will in respect of which these proceedings have been commenced is one which was drawn by the deceased. Some of the provisions are easily understood. Accordingly under the will it is clear that the Helen Street property and all the possessions in this pass to Isabella. The Murrumburrah Post Office property and its contents pass to Isabella as do the Toyota motor vehicle and the picture framing machinery in the Waldron Road property. 14 The Church Point property and it its contents was left to Isabella and Yvonne in equal shares as tenants in common. The Harden Shop properties, 27 Neill Street and 147 Neill Street were all left to Iolanda. 15 The Waldron Road property was held on trust for the plaintiff during Isabella's life with rentals during that time to be paid to Isabella. The remainder passes to the plaintiff. 16 The other provisions in the will are not that clear and I will deal now with the outstanding matters which will require the court to form a view as to the appropriate construction of the will. 17 The will of the deceased is three pages long and the last paragraph of the will provides as follows: "Any assets or property not bequeathed by the above bequests to be bequeathed to Yvonne Hoare"

18 In my view, that clearly is a residuary clause giving residue to Yvonne Hoare. It is not necessary for a residuary gift to use the word, "residuary" and in particular, having regard to the position of the clause in the deceased's will, it clearly is a residuary bequest. 19 The next matter that has to be dealt with is a provision in the will which has been referred to as the renovation fund provision. The deceased's will contained the following provision: All shares are to be held or sold at the executor's discretion together with cash in various accounts to be held in trust by the executor to be used in the repair and renovation and improvement of (the Church Point property)".

20 Prior to that there was the bequest of the Church Point property to Yvonne and Isabella. 21 The first question to be determined in respect of that provision is what is comprised within the fund. Assets which the deceased had which may possibly fall within it are the monies on deposit of $15,599.77, shares in companies of $29,773.75 and the deceased's interest as a beneficiary in the Filby estate. 22 The first two items of property I have mentioned do include the shares and moneys which were jointly owned between the deceased and Mr Filby. Clearly I think they do fall within the provisions as they passed to the deceased by survivorship. 23 The real question is whether the interest in the assets of Mr Filby in respect of those items of property which were left by Mr Filby is also included within the fund. As I have mentioned, no probate was taken out before the death of the deceased. It would seem to me that the interest of the deceased was merely that of a beneficiary in an unadministered estate. Such a beneficiary holds no interest in any property but has a right which is a chose in action to the due administration of the estate (see Commissioner for Stamp Duties (Qld) v Livingston (1965) AC 694 at 717). 24 It is also important to bear in mind the provisions of section 20 of the Wills Probate and Administration Act. They are as follows: "Every will shall be construed with reference to the real and personal estate comprised in it, to speak and take effect as if it had been made immediately before the death of the testator, unless a contrary intention appears by the will." 25 As is made clear by the section a will speaks from the date of death. Accordingly the subject matter of a gift is determined by the factual situation as at the date of death. That is the opposite to the provisions which apply where one determines the object of the gift when prima facie the will speaks from its date. 26 In the circumstances, it would seem to me clear, using those principles, that the interest of the deceased in the estate of Mr Filby does not fall within the fund to which I have referred. Given my finding as to residuary gift, clearly it then falls into residue. 27 The second problem that arises in relation to the renovation fund is the question of what should be done in respect of the property. At the date of death, the Church Point property was not in a good situation and it has deteriorated even further. The principles which perhaps apply in respect of this bequest would seem to be the following. 28 First, if a gift is of a specified amount and the money is to benefit the donee in a manner, it is a question of the construction of the particular will whether the primary object of the testator was to make a specified gift to the donee or to have the specified purpose established. Where the donee is to have the benefit, the gift takes immediate effect even though the purpose may be, inter alia, impossible. The donee is entitled to payments without the purpose being exercised (see Williams on Wills, ibid at 745). 29 In the situation which does apply here where a fund is given without specificity, to a donee for particular purposes for the benefit of certain property, the fund belongs to the persons entitled to the property. 30 There are two cases in point which illustrate that principle. One is in re Bowes; Earl of Strathmore v Vane (1896) 1 Ch 507 and the other is in re Lipinski's Will Trusts 1976, 1 Ch 235. In the latter case Oliver J had to deal with a bequest as to one half of an estate for the Hull Judeans (Maccabi) Association in memory of his late wife "to be used solely in constructing and improving the new buildings for the association". The association was an unincorporated association. However, similar problems arise with the construction with that gift. At page 249, Oliver J discussed in re Bowes and the matter before him and had the following to say. "Perhaps the most striking in the present context is in re Bowes (1896) 1 Ch 507, where money was directed to be laid out in the planting of trees on a settled estate. That was a purpose trust', but there were ascertainable beneficiaries, the owners for the time being of the estate; and North J held that the persons entitled to the settled estate were entitled to have the money whether or not it was laid out as directed by the testator. He says, at p510:Then the sole question is where this money is to go to. Of course, it is a perfectly good legacy. There is nothing illegal in the matter, and the direction to plant might easily be carried out; but it is not necessarily capable of being performed, because the owner of the estate might say he would not have any trees planted upon it at all. If that were the line he took, and he did not content for anything more than that, the legacy would fail; but he says he does not refuse to have trees planted upon it; he is content that trees should be planted upon some part of it; but the legacy has not failed. If it were necessary to uphold it, the trees can be planted upon the whole if it until the fund is exhausted. Therefore, there is nothing illegal in the gift itself; but the owners of the estate now say: It is a very disadvantageous way of spending this money; the money is to be spent for our benefit and that of no one else; it was not intended for any purpose other than our benefit and that of the estate. That is any purpose other than our benefit and that of the estate. That is no reason why it should be thrown away by doing what is not for our benefit, instead of being given to us, who want to have the enjoyment of it.' I think their contention is right. I think the fund is devoted to improving the estate, and improving the estate for the benefit of the persons who are absolutely entitled to it." I can see no reason why the same reasoning should not apply in the present case simply because the beneficiary is an unincorporated non-charitable association. I do not think the fact that the testator has directed the application solely' for the specified purpose adds any legal force to the direction. The beneficiaries, the members of the association for the time being, are the persons who could enforce the purpose and they must, as it seems to me, be entitled not to enforce it or, indeed, to vary it. Thus it seems to me that whether one treats the gift as a `purpose' trust or as an absolute gift with a superadded direction or, on the analogy of in re Turkington {1937} 4 All ER 501 as a gift where the trustees and the beneficiaries are the same persons, all roads lead to the same conclusion. In my judgment, the gift is a valid gift, and I will answer question 1 of the summons in sense (a)."

31 I do note that the gift does not expressly impose a condition as to the use of the fund as a term of taking the bequest. Accordingly, in my view, the terms of the provisions of the deceased's will is the creation of a fund for the benefit of certain property. Accordingly the funds belonging to those entitled to the subject property, namely Isabella and Yvonne irrespective of whether the fund was ever capable of being used for the purpose of the will. They can apply or not apply the fund for the purposes specified. 32 The next matter which is the one which is probably the most difficult in the case, concerns the distribution of the Mooney Mooney property. The provisions of the deceased's will which relate to the Mooney Mooney property are in the following terms: "I give devise and bequeath unto the executor in trust for Tony Drieman of 34 Pacific Highway, Mooney Mooney, the property known as 34 Pacific Highway, Mooney Mooney NSW. Tony Drieman is to pay weekly rental to Isabella Hodgson of $60 a week indexed to the CPI plus all council rates and charges and all other various government charges. The payment to cease on the death of Isabella Hodgson and the property at 34 Pacific Highway, Mooney Mooney is no longer held in trust by the Executor and becomes the property of Tony Drieman absolute. Should Tony Drieman predecease me then the property at 34 Pacific Highway, Mooney Mooney is bequeathed to Iolanda Hoar of 9 Torrington Avenue, Sefton, if alive - else to her daughter Yvonne Hoare."

33 As I have mentioned, Mr Drieman survived the deceased but died on 6 June 1997. He paid no rent in respect of the Mooney Mooney property between 6 March 1995 and the date of his death and he was already in arrears at the time of the last payment. 34 The first defendant who is the executor of the will of Mr Drieman submits that the above provision constituted a valid gift by Tony Drieman of the Mooney Mooney property. The contrary is submitted on behalf of Yvonne, namely that the gift fails and passes into the residuary estate of the deceased. 35 This is a case where it is appropriate to use the arm chair principle. Under the armchair principle, the evidence of the circumstances surrounding the testator at the date of his will is admissible as an aid in the construction of the will. "You may place yourself, so to speak, in the testator's armchair, and consider the circumstances by which he was surrounded when he made his will to assist you in arriving at this intention."

36 The justification for the armchair principle is that the court infers that the testator had his own surrounding circumstances. To quote Blackburn J in Allgood v Blake (1873) LR 8 Ex 160 at 162: "The general rule is that, in construing a will, the Court is entitled to put itself in the position of the testator, and to consider all material facts and circumstances known to the testator with reference to which he is to be taken to have used the words in the will, and then to declare what is the intention evidenced by the words used with reference to those facts and circumstances which were (or ought to have been) in the mind of the testator when he used those words...the meaning of words varies according to the circumstances of and concerning which they were used."

37 Here the particular circumstance to take into account is the fact that both at the date of death and the date of the will Mr Drieman was in occupation and was paying rent for the property at Mooney Mooney. The importance of this fact lies in the absence of the statement of the purpose of the first part of the trust in question. 38 Given that he is in occupation and is required to pay rent, the trust would be for him to occupy the property subject to the payment of charges and the rent. 39 Factors which favour this construction are: (a), the use of the word, "absolute" in the final trust provision on the death of Isabella and, (b) the use of the word, "trust" in the first part of the provision and, (c), the fact that the Mooney Mooney provisions are similar to the provisions made by the deceased in his will in respect of the Waldron Road property. 40 However there is a difference in relation to the Waldron Street property of which the plaintiff is the main beneficiary. The will provided as follows: "Should the plaintiff predecease Isabella Hodgson then the property 96 Waldron Road, Chester Hill is held in trust to the next of kin as named in the plaintiff's will. The rental and other conditions apply until the demise of Isabella Hodgson when the payments and property in trust cease and the property....becomes the property of the plaintiff's heirs absolutely." 41 The right to occupy was for the period up until the death of Isabella. It in effect is an interest for the remaining life of Isabella with an absolute remainder interest on her death. 42 In the circumstance of Mr Drieman predeceasing Isabella, the gift in remainder would fail. 43 The next question is whether the interest in remainder falls into residue or whether there is an intestacy. The matter is dealt with in Theobold on Wills, 5th edition at p321. There the authors say in dealing with reversions and remainders: "Where general words, such as "all other my lands" or the like are used, which, according to their natural meaning, are sufficient to include such interests as a reversion, or remainder, those interests are not be excluded because some of the limitations of the will canno6t take effect as regards the reversion or remainder. On the other hand, if a reversion is referred to as descending to a son to whom it could not pass if it is included in the will, it will not pass by the will. Again, a testator may have given partial interests in land his will, and the question then arises, whether a subsequent residuary devise passes the reversion of those lands. It is well settled that it does, though the residuary devise may be of lands `not hereinbefore devised or disposed of,' and there may be directions or limitations which are not appropriate to the reversion in the lands previously devised."

44 Accordingly the property now passes under the residuary gift to Yvonne. 45 There is a provision also in the will dealing with the roofing of Iolanda's property. That provision provides: "Should the house of Iolanda Hoare at 9 Torrington Avenue Sefton need a new tile roof installed then have a new tile roof installed with Colorbond guttering and downpipe as soon as possible." 46 The deceased was silent as to the fund from which that would be paid and Iolanda's property does not form part of the estate. It was transferred to her by the deceased inter vivos in 1975. The cost of roofing was not an expense referable to the maintenance of an estate asset and it would seem the monies should be provided out of residue. 47 There is one matter where there is perhaps an exception and that is in respect of the cost of the upkeep of assets devised by the will as appears from Allen v Attorney General (1914) 15 SR (NSW) 41. Those expenses ought to be borne by specific legatees of the properties. There may be other matters in the Family Provision Act matters which are about to commence which will need to be considered as to how the burden of any provision might be borne. 48 It seems to me it is appropriate to make the findings that I have made in this judgment. 49 I direct the parties to bring in short minutes to reflect those findings. 50 I have heard submissions on costs. In my view it is appropriate that each of the parties' costs on an indemnity basis be paid or retained out of the estate of the deceased. I so order. The only question that arises is whether those costs should be borne by residue or in some way by the properties which were the real subject matter of the proceedings. 51 Section 94(3) gives a power for the court to order such costs to be paid out of such property. In the circumstances Mooney Mooney importantly does fall into residue and passes to Yvonne and the costs in respect of the renovation fund, which is the other subject matter or fund, passes to Yvonne and Isabella. In the circumstances there are no particular factors which incline me to depart from the usual rule that the costs be payable out of residue and I so order.

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