Equity Trustees Wealth Services Limited v Astill

Supreme Court of NSW|2023-06-07|Before: Richmond J, Ms P, Williams J

JUDGMENT

These proceedings concern the construction of the will dated 15 August 1988 of the late Cedric Charles Hopping (the Will). Under the Will, the deceased (Cedric) left a right of residence in a property at 1 Summerside Street, Toukley, NSW (the Toukley property) to Margaret Astill (Margaret). The central issue is who, on the proper construction of cll 3 and 4 of the Will, is entitled to the remainder interest in the Toukley property.
The plaintiff, Equity Trustees Wealth Services Limited (Equity Trustees), is the executor and trustee appointed under the Will and was granted probate on 24 August 1990. The defendant is the executor of Margaret's estate. The administration of Cedric's estate is complete except for the outstanding issue relating to the Toukley property. By an amended summons filed in Court with the leave of Williams J on 10 June 2022, Equity Trustees initially sought orders both for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) and declarations as to the construction of the Will.

The terms of the Will

The dispositive provisions of the Will are as follows.
Clauses 3(a)-(d) contain a gift to Margaret of Cedric's motor vehicle, a gift to Robert Astill (the defendant's brother and Margaret's son) of Cedric's 20-foot fishing vessel "Marlin", a gift to the defendant of "such other boats and accessories" and a gift to Mark Hopping (one of Cedric's sons) of Cedric's caravan accessories.
Clauses 3(e) and (f) then deal with the two properties which Cedric owned at the time he made the Will (and still owned at his death 18 months later), being the Toukley property and another property at 40 The Strand, Gladesville (Gladesville property), and provide as follows: 3. I GIVE free from all taxes and duties payable in respect of my death, my estate or the administration of my estate the following: … (e) My real property situate and known as 1 Summerside Street, Toukley or such other realty as constitutes my principal place of residence as at my date of death and my furniture and articles of household or domestic use or ornament therein contained to my Trustee upon the following conditions and trusts: (i) To allow my friend MARGARET ANNE ASTILL to reside therein free of rent until the date of termination of this right of residence (as hereinafter defined). (ii) This right of residence is conditional, upon my said friend paying all rates, taxes (other than Capital Gains Tax) and outgoings on the said property, keeping the property insured and in a good and tenable state of repair to the satisfaction of my Trustee (having regard to its condition at the date of death). (iii) This right of residence shall not come into operation if my said friend predeceases me. (iv) the date of termination of this right of residence shall be the date of the first to happen of the following events: (a) the death of my said friend. (b) my said friend giving my Trustee notice in writing that she no longer wishes to exercise this right of residence. (c) my said friend failing or refusing to comply with any condition specified in sub-clause (ii) above for a period of 3 months after my Trustee requests in writing that she does so. (v) I direct that without limiting the powers herein vested in my Trustee: (a) On receipt of a written request from my said friend to sell such property as is held upon the trusts and conditions of this clause of this my Will, such sale in accordance with the powers hereinafter vested in my Trustee; (b) To employ the proceeds of such sale in the purchase of an interest in realty, such purchase and the title to be accepted shall be within the sole and absolute discretion of my Trustee; (c) That should the proceeds of such sale provide insufficient funds to cover the cost of purchase of substitute real property my Trustee shall should my said friend so desire join with my said friend in the purchase of substitute real property as tenant-in-common in proportions consistent with contributions to the total purchase price including costs of the substitute real property; (d) Any property purchased under the trusts of this clause shall be held upon the trust and conditions of this clause of this my Will, including this provision for sale and repurchase; (e) Any net surplus on the sale and purchase of realty as aforesaid shall be held upon the same conditions and trusts as the original property of this trust. (vi) Upon the date of termination of this right of residence or upon my date of death if this right of residence does not come into operation (as provided in sub-clause (iii) above) my Trustee shall hold my said property upon the same trusts and conditions as my residuary estate and having become an accretion thereto to follow the destination thereof AND I DIRECT that such vesting conditions as exist in relation to any interest in my residuary estate shall be read to include in respect of the property held upon the trusts of this clause of this my Will a provision that such interest shall be contingent upon the beneficiary surviving the date of termination of this right of residence. (f) My real property situate and known as 40 The Strand, Gladesville and my furniture and articles of domestic or household use or ornament therein contained to my Trustee upon the following conditions and trusts: (i) To permit ALLAN HARDY or any other person as may be in occupation of such realty at the time of my dealt to reside therein and the use and enjoyment of such furniture and articles of domestic or household use or ornament therein contained at no charge or cost for a period of twelve (12) weeks from the date of my death; and (ii) From and after the expiration of such period of twelve (12) weeks to sell call in and convert into money the said realty and contents and from the proceeds of such sale and conversation pay: (a) The sum of five hundred dollars ($500.00) to ERIKA LAWTON absolutely; (b) The sum of one thousand dollars ($1,000.00) to my niece VALERIE O'BRIEN absolutely; (c) The sum of one thousand dollars ($1,000.00) to my nephew GEORFFREY O'BRIEN absolutely; (d) The sum of five hundred dollars ($500.00) to my friend MARY PIKE absolutely; (e) The sum of one thousand dollars ($1,000.00) to my friend RON PILKINGTON absolutely; (f) The sum of two thousand dollars ($2,000.00) to Sister MARGARET WYNDOW of Balmain Hospital in appreciation of her care and kindness to me during my illness; (g) The rest and residue of such sale and conversion upon the same trusts and conditions as my residuary estate and having become an accretion thereto to follow the destination thereof.
The right of residence conferred on Margaret, if she survived Cedric, by cl 3(e) had three significant features: (a) it would continue rent free until Margaret's death provided that she paid all rates, taxes (other than capital gains tax) and outgoings on the property, kept the property insured and maintained the property in a good state of repair; (b) Margaret could terminate the right of residence at any time by notice to the Trustee; (c) the Trustee was given the power to sell the Toukley property if Margaret so requested, and to reinvest the proceeds in a new property for Margaret to live in during her life, but on terms that preserved for Cedric's estate an interest in the substitute property, reflecting the proportion of the purchase price contributed from the proceeds of sale of the Toukley property.
It is not in dispute that the date of termination of the right of residence of the Toukley property (date of termination) was the date of Margaret's death under cl 3(e)(vi) and the residuary estate to which the Toukley property then became an accretion is governed by cl 4, which provides as follows: 4. I GIVE DEVISE AND BEQUEATH the rest and residue of my estate both real and personal to my Trustee UPON TRUST to pay thereout all my just debts funeral and testamentary expenses probate estate death and other duties and thereafter for my said friend MARGARET ANNE ASTILL absolutely PROVIDED HOWEVER should my said friend MARGARET ANNE ASTILL predecease me I DIRECT my Trustee to divide the balance of my residuary estate into nine (9) equal parts and to hold such parts on the following conditions and trusts: (a) As to one (1) such part for such of them my son MARK CHARLES HOPPING and his children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (b) As to one (1) such part for such of them my son COLIN WILLIAM HOPPING and his children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (c) As to one (1) such part for such of them my daughter MAXINE GAY BENNELL and her children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (d) As to one (1) such part for such of them my daughter EVELYN MAY HOPPING and her children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (e) As to one (1) such part for such of them my friend ROBERT ASTILL and his children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (f) As to one (1) such part for such of them my friend PETER JOHN ASTILL and his children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (g) As to one (1) such part for such of them my friend ROSEMARY ANNE ASTILL and her children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (h) As to one (1) such part for such of them my friend DENISE ASTILL and her children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (i) As to one (1) such part for such of them my niece AMANDA RUTH HOPPING and her children as shall be living at my death and attain or have attained the age of eighteen (18) years and if more than one in equal shares absolutely. (j) If the trusts of any share under the trusts in this clause fail then that share together with all shares that may have been added to that share by operation of this provision shall accrue to and be held upon the trusts of the other share or shares, and if more than one equally.
Each of the gifts of residue in cl 4(a) to (i) is a class gift because the persons who are to take each of the nine parts are "united or connected by a common tie so you can say that the testator was looking to the body as a whole rather than to members as individuals"; Re Michell (deceased) (1971) 2 SASR 312 at 320; G E Dal Pont, Law of Succession, (LexisNexis, 3rd ed, 2021) at [8.61]. The evidence establishes that there were one or more beneficiaries within each class at the date of Cedric's death. Two beneficiaries named in cl 4(h) and (i) predeceased Margaret, being Denise Astill (who died on 27 November 2009) and Amanda Hopping (who died on 14 April 2008). However, it appears from the evidence that each of them had children who were alive at the date of Margaret's death and that for each of the nine classes there were surviving members at Margaret's death capable of taking the share assigned to that class.
The scheme of the Will is that after making specific gifts of certain chattels in cll 3(a) to (d) to named beneficiaries, the two remaining assets of significance (being the Toukley and Gladesville properties) are dealt with differently depending on whether Margaret predeceased Cedric: 1. If Margaret predeceased Cedric then the net proceeds of sale of the Gladesville property after making the gifts in cl 3(f)(ii)(a) to (f) together with the Toukley property would fall into residue to be held on trust in nine equal parts for the persons named in the proviso to cl 4 (and their children): the named persons being Cedric's four children, four members of Margaret's family and Cedric's niece, Amanda Hopping. 2. If Margaret survived Cedric then the net proceeds of sale of the Gladesville property after making the gifts in cl 3(f)(ii)(a) to (f) would fall into residue and pass to Margaret but the Toukley property would be held on trust subject to a right of residence in favour of Margaret until her death (unless terminated earlier under cl 3(e)(iv)) upon terms that allowed for the acquisition of a substitute property in which she could also reside until her death, and on her death the Toukley property (and any substitute property) would then fall into residue to be dealt with under cl 4, subject to the operation of the direction in cl 3(e)(vi).
It is the interaction of cl 3(e)(vi) and cl 4 in this second alternative scenario which has created the difficulties of construction in this case.

Background to the proceedings

Cedric was at the date of his death the registered proprietor of the Toukley property.
Cedric had four children from his first marriage which ended on 18 November 1975, being Mark Charles Hopping, Maxine Gay Bennell, Colin William Hopping, and Evelyn May Hopping.
In or around 1984, Cedric commenced living with Margaret and at the time of his death they were in a de facto relationship. The defendant, Peter Astill (Peter) is one of Margaret's four children and the executor of her estate.
Cedric made two wills before the Will - one on 22 March 1986 (the 1986 Will) and another on 8 August 1988 (8 August Will). There is no dispute between the parties that all three wills were substantially similar.
Cedric died on 23 February 1990, and, on 24 August of that year, probate of the Will was granted to Equity Trustees (formerly known as ANZ Executors & Trustee Company Limited).
In 1991, each of Cedric's four children commenced family provision proceedings in this Court claiming provision under the Family Provision Act 1982 (NSW) (1991 proceedings). On 9 September 1992, Master Macready delivered judgment making provision for each of Cedric's children.
Master Macready did not disturb Margaret's right of residence in the 1991 proceedings.
On 9 May 2015, Margaret died, and on 19 November 2020 probate was granted to Peter as executor under her will dated 19 January 2015. Margaret lived in the Toukley Property until her death.
On 22 August 2017, Equity Trustees obtained an opinion from a barrister as to the proper construction of the Will, who took the view that the preferable construction was that the Toukley Property was devised to Margaret and formed part of her estate (the Counsel's Advice). The relevant part of the Counsel's Advice is as follows (underlining in original): 12. In my opinion the Will is not as troublesome as appears at first blush. Paragraph 3(e)(vi) came into operation on 9 May 2015, and it directed the current trustee of the estate to hold the Toukley property on the same trusts and conditions as applied to the residuary estate. In clearer terms, what the Will did was to give Mrs Astill a right of residence in the Toukley property, and in remainder it directed that Toukley fall into and form part of the residuary estate. 13. The added direction forming an addendum to the operative part of the paragraph 3(e)(vi) is an unnecessary complication if one tries to read it as integral to the operative disposition in paragraph 3(e)(vi). That is why in paragraphs 4 and 11 above in setting it out I have separated it as a separate paragraph. Addressing it as a stand-alone provision its operation becomes apparent. Any residuary beneficiary is not to gain an interest in the remainder estate in Toukley unless he or she survives the date of termination. Or, to put it in another and hopefully simpler way: when Mrs Astill's right of residence ended, for whatever reason - (a) the remainder interest in the Toukley property then fell into residue; and (b) given that this was likely to occur, and did occur, many years after the Will came into operation, it would make things easier if this accretion to the residuary estate had to be distributed only among the residuary beneficiaries who were still living at the date of distribution of this accretion; and this is the effect of the "direction" at the end of paragraph 3(e)(vi). 14. Then proceeding on from there, one goes to paragraph 4 of the Will to identify the residuary beneficiaries. This, too, is tolerably clear. The residue of the estate is given to Margaret Astill. 15. Had Mrs Astill predeceased Mr Hopping, then under the Proviso in paragraph 4 of the Will the Trustee would have been directed to divide the net residue into nine shares and distribute them to the persons named in subparagraphs (a) to (i), (with the accruer provision in subparagraph (j) operating in the event that any of the nine named beneficiaries had predeceased Mrs Astill. But none of these nine gifts is, in my opinion, of the least relevance, for they were all clearly gifts‑over. Paragraph 4 gave the residuary estate to Mrs Astill "absolutely", but subject to the express proviso about dividing it into nine equal parts "should my friend Margaret Anne Astill predecease me". She did not. She outlived the testator, and so paragraph 4 of the Will gives the entire net residue of the estate to her.
Counsel's Advice went on to recommend that as there was some uncertainty regarding the correct construction of the Will, the consent of Cedric's children, and certain other potential beneficiaries under the Will should be obtained before the Toukley property was transferred to Margaret's legal personal representative.
On 14 November 2019, Equity Trustees wrote to Peter's solicitors indicating that it would transfer of the Toukley Property to Peter in his capacity as the legal personal representative of Margaret's estate "as per Counsel's advice", subject to payment of certain disbursements incurred by Equity Trustees in the administration of the Estate.
On 17 July 2020, two of Cedric's children, Evelyn and Colin, contacted Equity Trustees and stated their opposition to the transfer of the Toukley Property to Peter, and that they were seeking independent legal advice.
On 21 July 2020, Equity Trustees conducted a title search which showed that Cedric was still recorded as the registered proprietor of the Toukley property, and on the same day sent Peter's solicitors an email seeking confirmation that the transfer of the Toukley property had not taken place and would not proceed until the issue as to the proper construction of the Will was resolved. In subsequent emails from Equity Trustees to Peter's solicitors over the period from late July 2020 to 23 June 2021, Equity Trustees stated that its consent to the transfer of the Toukley property to Peter had been withdrawn, given the dispute which had arisen regarding the proper construction of the Will.
On 19 November 2020, Peter obtained probate in respect of Margaret's will.
In July 2021, the Toukley Property was transmitted from Cedric to Peter, after his solicitors registered a transmission application. That transmission application identified Peter as the executor of the will of the deceased registered proprietor, Cedric. There is no dispute that Peter was not the executor of Cedric's estate, and that the transmission application was therefore incorrect. Peter, by his solicitors, has given an undertaking to transfer the Toukley property to the plaintiff, if that is the consequence of the orders made in these proceedings.
On 4 August 2021, Equity Trustees lodged caveat no AR373183 over the Toukley property. On 9 May 2022, Peter filed a lapsing notice in respect of the caveat. On 1 June 2022, Equity Trustees commenced these proceedings, and on 3 June 2022 obtained an order extending the operation of the caveat until further order of the court.
If Equity Trustees is successful in the proceedings, consequential orders will need to be made to remove Peter as the registered proprietor.

Cedric's prior wills

Cedric made two prior wills. The first is dated 22 March 1986 (1986 Will) and is structured in broadly the same way as the Will but there are subtle differences. So far as relevant, these differences are as follows: 1. Clause 4 conferred on Margaret a right to reside in the Toukley property if she survived Cedric, which terminated on her death. The terms of the right of residence were not as detailed as in cl 3(e) of the Will but were in substance the same. Following termination of the right of residence, the plaintiff (as the trustee) was required to sell the Toukley property and divide the proceeds into nine equal parts to be held for nine named persons and their children (who were the same as those mentioned in the proviso to cl 4 of the Will). 2. Clause 5 dealt with the Gladesville property in a similar way to cl 3(f) of the Will, except that the person given the right to reside in the property for 12 weeks following Cedric's death was a different person to the one named in cl 3(f)(i) of the Will, and the persons receiving gifts of sums of money out of the proceeds of sale were slightly different. Importantly, the net proceeds of sale after making these gifts fell into residue as in the case of cl 3(f)(ii)(g) of the Will. 3. Clause 6 dealt with the residue in a similar way to cl 4 of the Will with two exceptions: first, there was a specific gift out of residue of $5,000 to Dawn McLeod who does not feature in cl 4 of the Will, and; second, the residue was to be divided into ten equal parts rather than nine (nine of which were held for the same persons mentioned in cl 4 of the Will and the tenth was for Dawn McLeod who was not).
Cedric made a further will on 8 August 1988 (August 1988 Will) which makes the following material changes to the 1986 Will: 1. Clauses 4 and 5 of the 1986 Will were merged into a new cl 3, with cl 4 becoming cl 3(e) (the Toukley property) and cl 3(f) (the Gladesville property) respectively. Clause 3(e) was in the same terms as cl 3(e) of the Will except that the Toukley property was not specifically named in cl 3(e). Rather, the right of residence was conferred in respect of "my real property in which I may reside at the time of my death". It is this "new" cl 3(e) (replacing cl 4 of the 1986 Will) which introduced cl 3(e)(vi). 2. Clause 3(f) dealt with the Gladesville property in the same terms as cl 3(f) of the Will. 3. Clause 6 of the 1986 Will dealing with the residue was replaced by a new cl 4 which differed from cl 6 of the 1986 Will in two respects: it removed the gift of $5,000 to Dawn McLeod, and it removed her one tenth share of the residue (which now comprised nine rather than ten parts). Clause 4 of the August 1988 Will was in the same terms as cl 4 of the Will.
The only difference between the August 1988 Will and the Will (made one week later) is that the opening words of cl 3(e) are amended to include a specific reference to the Toukley property. It can be inferred that this was done for the avoidance of doubt.
The only relevant changes in the drafting of the three Wills occurred when cl 3(e) and cl 4 were included in the August 1988 Will: (a) cl 3(e) altered the treatment of the remainder interest in the Toukley property on the termination of the right of residence by introducing cl 3(e)(vi) in place of a trust for nine named beneficiaries and their children (identical to those named in the proviso to cl 4 of the Will); and (b) cl 4 removed one of the categories of residuary beneficiary (Dawn McLeod and her children) where Margaret predeceased Cedric so that the residuary beneficiaries in that situation were now the same as the beneficiaries who had in the 1986 Will been entitled by the express provision in cl 4 of the 1986 Will to the remainder interest in the Toukley property on Margaret's death.

Issues

There is a clear difficulty in reading cl 3(e)(vi) and cl 4 together. Clause 3(e)(vi) provides that the Toukley property will form part of the residuary estate once the date of termination arrives and directs that the interest of a beneficiary in the Toukley property as part of the residuary estate is contingent on that beneficiary surviving the date of termination. Clause 4, read in isolation, does not contemplate a situation where any interest in residue will arise in favour of any person, other than Margaret, where Margaret survives Cedric. This creates an issue as to how cl 3(e)(vi) and cl 4 are to operate in relation to the Toukley property where, as has occurred, Margaret survives Cedric so that the proviso in cl 4 cannot, read literally, apply to that property.
The parties agree that there are four possible constructions: 1. the Toukley property forms part of the residuary estate that was gifted absolutely to Margaret, and now forms part of her estate to be distributed by Peter in his position as executor. 2. the Toukley property fell into intestacy at the date of termination as cl 3(e)(vi) as an incomplete gift. 3. the Toukley property falls into the residuary estate and is to be held for the beneficiaries in each of the nine classes named in cl 4, irrespective of whether they survived the date of termination. 4. the Toukley property falls into the residuary estate and is to be held for the beneficiaries in each of the nine classes named in cl 4 who survived the date of termination.
In the 1991 proceedings, it was not necessary for Master Macready to determine the proper construction of the Will, but his Honour expressed the following view, by way of obiter dictum: "Another construction of clause [3(e)(vi)] would be that given the event of that termination at some stage after commencement of the right of residence, the trust and conditions referred to in [3(e)(vi)] are in fact those trusts and conditions in respect of the residuary estate where the residuary estate is divided into nine equal parts. Such construction would lead to the house being held for the nine parties I have mentioned and would have avoided intestacy…my preferred view is that the plaintiffs' present entitlement is that each has a one ninth interest in the remainder following upon the termination of the right of residence."
While these observations involve a rejection of the first and second construction and might be seen as support for the third construction, I do not regard them as inconsistent with (or a rejection of) the fourth construction, which is a variation of the third and was not raised before Master Macready.
If any of constructions (2)-(4) identified in [36] is preferred, the Court will be required to make attendant orders correcting the folio of the register maintained in relation to the Toukley property.

Relevant principles

The starting point for the construction of a will is the following statement of Viscount Simon LC in Perrin v Morgan [1943] AC 399 at 406: …the fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case - what are the "expressed intentions" of the testator.
This fundamental principle was recently stated by White JA (with whom Gleeson JA agreed) in De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351 at [50]: The object of construction of a will is to give effect to what can be ascertained, having regard to admissible extrinsic evidence, the testatrix intended by the words she used: Fell v Fell (1922) 31 CLR 268 at 273-274; [1922] HCA 55; Perrin v Morgan [1943] AC 399 at 406, 416. The intention of the testatrix is to be determined from the language of the will read in the light of the circumstances in which it was made. The Court is entitled to sit in the "testatrix's armchair" to understand the language she employed: Hatzantonis v Lawrence [2003] NSWSC 914, [7] ff (Bryson J).
It is necessary to consider the terms of the Will as a whole to ascertain, if possible, the basic scheme which the deceased had conceived for dealing with his estate and then to construe the Will, if possible, to give effect to that scheme: Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 at [19].
Isaacs J in Fell v Fell [1922] HCA 55; (1922) 31 CLR 268 at 273-275 identified these and other relevant principles of construction as follows (citations omitted): (1) "Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence, as is necessary in order to enable us to understand the words which the testator has used" (2) "The instrument … must receive a construction according to the plain meaning of the words and sentences therein contained. But … you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it" … (3) "If the will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the Court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has, on the whole will, sufficiently declared"… (4) An inference cannot be made "that did not necessarily result from all the will taken together"… A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed … (5) "[The Court] cannot give effect to any intention which is not expressed or plainly implied in the language of" the "will" "You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication" … (6) "If the contents of a will show that a word has been undesignedly omitted, or undesignedly inserted, and demonstrate what addition by construction or what rejection by construction will fulfil the intention with which the document was written, the addition or rejection will by construction be made"… (7) "When the will is in itself incapable of bearing any meaning unless some words are supplied, so that the only choice is between an intestacy and supplying some words; but even there, as in every case, the Court can only supply words if it sees on the face of the will itself clearly and precisely what are the omitted words, which may then be supplied upon what is called a necessary implication from the terms of the will, and in order to prevent an intestacy"… (8) "There are two modes of reading an instrument: where the one destroys and the other preserves, it is the rule of law, and of equity, following the law in this respect (for it is a rule of common sense …), that you should rather lean towards that construction which preserves, than towards that which destroys. Ut res magis valeat quam pereat is a rule of common law and common sense; and much the same principle ought surely to be adopted where the question is, not between two rival constructions of the same words appearing in the same instrument, but where the question is on so ready an instrument as that you may either take it verbally and literally, as it is, or with a somewhat larger and more liberal construction, and by so supplying words as to read it in the way in which you have every reason to believe that the maker of it intended it should stand; and thus again, according to the rule ut res magis valeat quam pereat, to supply, if you can safely and easily do it, that which he per incuriam omitted, and that which instead of destroying preserves the instrument; which, instead of putting an end to the instrument and defeating the intention of the maker of it, tends rather to keep alive and continue and give effect to that intention" (9) If on reading the will you can see some mistake must have happened, "that is a legitimate ground in construing an instrument, because that is a reason derived not dehors the instrument, but one for which you have not to travel from the four corners of the instrument itself"… (10) "The mind never inclines towards intestacy: that is adernier resort in the construction of wills" …
The last of these principles, sometimes referred to as the 'golden rule of construction', is that the Court should prefer a construction that avoids an intestacy: In re Harrison (1885) 30 Ch D 390 at 393-394; Estate of Kallidis; Kallidis v Kallidis [2012] NSWSC 1485 at [118]-[121].
As indicated in the first proposition stated by Isaacs J in Fell v Fell, extrinsic evidence of the facts and circumstances known to the testator at the time of making the will is admissible to assist in the construction of the will under the "armchair principle". This principle was summarised by White J (as his Honour then was) in Parry v Haisma [2012] NSWSC 290 at [10] (emphasis in original): There was no real controversy about the admissibility of extrinsic evidence for the purpose of construing the will. In Higgins v Dawson [1902] AC 1 the House of Lords said that evidence of surrounding circumstances could only be adduced where there was ambiguity (at 7, 8 and 11) and endorsed a very narrow approach to finding ambiguity (at 10). That approach is not consistent with the current approach to construction of wills (Perrin v Morgan [1943] AC 399) and was not urged in the present case. Evidence of the circumstances surrounding the testatrix was admissible to assist in the construction of the will so that the court could place itself "so to speak, in [the testatrix's] arm-chair and consider the circumstances by which [she] was surrounded when [she] made [her] will to assist … in arriving at [her] intention" (Boyes v Cook (1880) 14 Ch D 53 at 56; Allgood v Blake (1872-73) LR 8 Exch 160 at 162). As it was put in Allgood v Blake (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 are used."
Section 32 of the Succession Act 2006 (NSW), which permits the admission of extrinsic evidence to assist in the construction of a will in certain circumstances, does not apply in the present case because the Will was made before it commenced operation.
The defendant relied on two subsidiary rules of construction which are sometimes resorted to: first, the rule that absolute gifts should not be cut down except by clear words; and, second, the 'rule of despair'.
The rule that absolute gifts should not be cut down except by clear words was explained by Young AJ in Cobcroft v Bruce (2013) 9 ASTLR 397; [2013] NSWSC 774 at [22]-[23]: There is the famous rule in Lassence v Tierney (1849) 41 ER 1379, which is sometimes called the rule in Hancock v Watson [1904] AC 14, that where one finds an absolute gift and trusts are engrafted or imposed on that absolute interest which fail, then the absolute gift takes effect to the exclusion of the residuary donee. That rule is only of peripheral value in the instant case because there is no uncertainty as to the intended benefaction of the nephews. However, Lassence v Tierney is really just an illustration of a wider rule and that is that a clear gift in a will is not cut down by anything subsequent in the will which does not with reasonable certainty indicate the intention of the testator to cut it down. That is, an absolute interest is not cut down except by clear words (see Williams on Wills (2008, 9th ed, LexisNexis Butterworths) at [82.2] and cases there cited including Abbott v Middleton (1858) 7 HL Cas 68 at 84). The learned editors of Williams say also: where personal property is given in terms which confer an absolute interest on a named donee, and then further interests are given merely on the termination of the donee's interests, and not in defeasance of it, the absolute interest is not cut down and the further interests fail, and an absolute interest is not cut down by a precatory trust unless the trust creates an imperative obligation. (See Hoare v Byng (1844) 10 Cl & Fin 508; Re Johnson [1939] 2 All ER 458.)
The so called "rule of despair" provides that where two clauses in a will are irreconcilable, the latter will prevail. As the name suggests, it is a rule of last resort: Dal Pont, Law of Succession, at [8.34]. It was explained by Vickery J in Thomson v Thomson [2008] VSC 375 (footnotes omitted) as follows: [15] This principle, as applied to wills, emerged as the so-called "rule of despair" to the effect that where two clauses in a will are irreconcilable, the last clause as it is written in the will shall prevail: Cum duo inter se pugnantia reperiuntur in testamento, ultimum ratum est. Most courts acknowledge the rationale of the rule to be that the last clause embodies the last expression of the testator's intention; or that, as between two repugnant clauses, the latter of the two should prevail on the basis that what the testator writes last is his "last will"; or on the footing that where the clauses are entirely irreconcilable, so that they cannot possibly stand together, the clause which is last in position shall prevail, the subsequent words being considered to denote a subsequent intention. … [22] Further, the so-called "rule of despair" will yield to other approaches to will construction which have been developed to deal with inconsistent clauses. Some examples are: (a) where the clauses cannot be reconciled and one of the clauses is ambiguous, the unambiguous clause will prevail regardless of their relative positions in the will; (b) similarly, when a general provision is found to be inconsistent with a specific provision in the same instrument, the specific provision will prevail; (c) after reading the will as a whole, and ascertaining the intention of the testator, it appears that the intention was more accurately expressed by the earlier clause rather than by the later one, the earlier will prevail; (d) the rule will not be applied where its application would result in an intestacy; (e) in some situations conflict between clauses may arise because a testator has given the same property to two different persons. In such a case, if, upon reading the will as a whole, this is consistent with the testator's intention, the court may hold that each beneficiary take a half share. Lord Brougham LC in Sherrat v Bentley for example said that the earliest authorities which recognised the revocation of an earlier inconsistent clause in a will by a later one did not lay down an absolute rule. Rather, it is consistent with the earliest authorities that repugnance may not be complete where later clauses granting a gift to a second beneficiary did not contain words of exclusion against the first beneficiary of the gift, or the object of the grant was capable of division and a moiety to be given to each devisee; (f) further, two inconsistent gifts of residue may lead a court to hold that the second residuary gift was intended to catch lapsed shares of the earlier residuary gift.

Plaintiff's submissions

The plaintiff submits that the preferable construction of the Will is that the Toukley property is intended to be devised to such of the nine beneficiaries identified in cl 4 as survive the date of termination. This is construction (4) identified in [36] above.
The plaintiff submits that cl 3(e)(vi) is designed to set out the instructions as to the remainder interest in the Toukley property once Margaret's right of residence has come to an end, and it can be divided into two parts: 1. a provision for the remainder interest in the Toukley property to fall into the residuary estate following termination of the right of residence: "Upon the date of termination of this right of residence… my Trustee shall hold my said property upon the same trusts and conditions as my residuary estate and having become an accretion thereto to follow the destination thereof…" 1. a direction that makes the entitlement of any residuary beneficiary to so much of the residue as consists of the Toukley property contingent upon that beneficiary surviving the date of termination of Margaret's right of residence: "… AND I DIRECT that such vesting conditions as exist in relation to any interest in my residuary estate shall be read to include in respect of the property held upon the trusts of this clause of this my Will a provision that such interest shall be contingent upon the beneficiary surviving the date of termination of this right of residence."
The effect of the second part of cl 3(e)(vi) is to split the residue into two parts: the part of the residue that consists of the remainder interest in the Toukley property, and the part that does not. The part that contains the Toukley property must be dealt with in accordance with cl 3(e)(vi) read in conjunction with cl 4.
In other words, the gift of the residue to Margaret in cl 4 should be read subject to the second part of cl 3(e)(vi) to the extent that the residue includes the Toukley property following the termination of her right of residence.
The plaintiff submits that reading cl 4 as subject to cl 3(e)(vi), the next question which arises is whether the remainder interest in the Toukley property (a) falls on a partial intestacy to the beneficiaries entitled to Cedric's estate on an intestacy, or (b) falls to the residuary beneficiaries in cl 4 in nine shares, or (c) falls to such of the nine residuary beneficiaries in cl 4 who survived the deceased and Margaret.
The plaintiff submits that the third alternative is to be preferred, relying on the golden rule of construction referred to above. To avoid an intestacy the words "should my friend Margaret Anne Astill predecease me" would be read as "should the gift of residue to Margaret Anne Astill fail or lapse in part or in whole".
In support of this contention, the plaintiff submits that the Court can have regard to the terms of the 1986 Will. In the 1986 Will, Cedric dealt with the Toukley property in a different way. Clause 4 of the 1986 Will provided for a right of residence in favour of Margaret, and upon the termination of that right of residence directed the trustees to: sell call in and convert into money the said real property and the said items of furniture and household effects and to divide the proceeds of such sale and conversion into nine (9) equal parts and to hold such parts on the following conditions and trusts…
Clauses 4(a)-(i) then identify the same nine beneficiaries identified in cl 4 of the Will which tends in favour of a conclusion that the Toukley property was intended to be left to the nine beneficiaries upon the termination of the right of residence.

Defendant's submissions

The defendant adopts the analysis in the Counsel's Advice and submits that the first part of cl 3(e)(vi) makes an absolute gift of the Toukley property to Margaret under cl 4 following the termination of the right of residence, and the direction at the end of that clause does not cut down this absolute gift for essentially two reasons. First, the direction is to be treated as a separate clause which is ambiguous and the ambiguity is to be resolved by applying the principle referred to at [48] above that a clear and absolute gift (in this case, the gift in cl 4) should not be cut down without clear words to the contrary (and there are no clear words to the contrary). Second, cl 4 is the specific provision regarding the residuary estate which should prevail over the general provision in cl 3(e)(vi). While the 'vesting conditions' which exist in relation to the residuary estate are taken to apply to the Toukley property by the operation of the direction at the end of cl 3(e)(vi), this does not pick up the vesting conditions in the proviso to cl 4 because, as noted in Counsel's Advice, these are gifts over in the event that Margaret predeceased Cedric which did not occur. Reading the Will as a whole, Cedric's intention is clear that the residuary estate should be absolutely gifted to Margaret, as set out in cl 4, and by giving effect to this construction of cl 4 the Court will avoid an intestacy in relation to the Toukley property.
The defendant submitted that this approach was also supported by the rule of despair because, if there is a conflict between the direction in cl 3(e)(vi) and cl 4, the latter as the later clause should prevail.
The defendant also submitted that the following extrinsic evidence was admissible under the armchair principle to resolve the ambiguity that was created by the direction in cl 3(e)(vi): 1. Clause 4 of the August 1988 Will, which gifted the residuary estate to Margaret entirely; 2. The primacy that Cedric gave to Margaret and her sons Peter and Robert in the gifts of personal property at cll 3(a)-3(c). 3. Cedric and Margaret's de facto relationship from 1984-1991, and the fact that they resided in and shared the Toukley property as a familial home during this time along with Margaret's children. 4. Margaret's understanding that the decision in the 1991 proceedings did not interfere with her interest in the Toukley property. 5. Margaret's treatment of the Toukley Property as her own, including making significant improvements to the property.
The defendant submits that the approach taken by the plaintiff is an impermissible rewriting, rather than construction, of the Will. The preferable conclusion is that the Will be construed such as that the Toukley property formed part of the residuary estate that was gifted absolutely to Margaret.

Consideration

In my opinion, as the plaintiff submits, the fourth alternative construction of the Will set out at [36] above is correct for the following reasons.
First, reading the Will as a whole and taking into account the scheme of the Will summarised at [12] above, it is clear that Cedric did not intend to make a gift of the Toukley property to Margaret outright, and intended only to give her a right of residence during her lifetime. That right of residence is carefully circumscribed - it contains conditions which Margaret must comply with and also allows for a similar right of residence over a replacement property should she wish to exercise the right conferred by cl 3(e)(v). None of this would have been necessary, and cl 3(e) would not have been included, had Cedric intended to gift the property to her outright. A natural inference from this, and the different treatment given to the Toukley property in cl 3(e) compared to the Gladesville property in cl 3(f) (the net proceeds of sale of which pass to Margaret after certain specific gifts), is that Cedric did not intend the Toukley property to pass to Margaret's estate on her death.
Second, several conclusions can be drawn from the words of cl 3(e)(vi): 1. The opening words of cl 3(e)(vi) contemplate that the Toukley property will follow the destination of the residuary estate either (i) upon termination of the right of residence, or (ii) if the right of residence does not come into existence because Margaret predeceases Cedric. In the latter case, the direction in cl 3(e)(vi) will be inapplicable (because, as is apparent from the concluding words, it is predicated on the right of residence having come into existence) and the Toukley property will fall into residue and pass to the beneficiaries referred to in the proviso to cl 4 according to its terms. 2. The direction in cl 3(e)(vi) is therefore only relevant to the former case, ie. where the right of residence has come into existence and then terminated. The right of residence will be terminated in one of the three alternative ways set out in cl 3(e)(iv). Under the first of these (the death of Margaret) the only "vesting conditions" which could potentially apply are those contained in the proviso to cl 4 (given the requirement that "the beneficiary" survive the date of termination) but they cannot apply if cl 4 is read literally due to the words "should my said friend… predecease me". In other words, the purpose of the direction in one of the three situations in which it is intended to apply cannot be achieved (if cl 4 is read literally). 3. If, on the other hand, the right of residence were to terminate under either the second or third alternative in cl 3(e)(iv), and the expression "vesting conditions" in cl 3(e)(vi) is read as referring to the "conditions" in the proviso to cl 4, the position is the same as in the previous paragraph - the purpose of the direction could not be achieved if cl 4 is read literally due to the words "should my said friend… predecease me" (it may be noted that cl 4 expresses paragraphs (a) to (j) as being "conditions" which is consistent with their being referred to as "vesting conditions" in cl 3(e)(vi)). 4. However, if the expression "vesting conditions" in cl 3(e)(vi) is read as referring a "condition" implied in cl 4 that Margaret must survive Cedric to take the residue, which will have been satisfied if the second or third alternative in cl 3(e)(iv) applies, then Margaret would take the Toukley property because she would survive the termination of the right of residence. However, this would lead to the absurd result that although Cedric only expressly conferred on Margaret a right of residence for her lifetime she would take the Toukley property absolutely in circumstances where she had rejected the right of residence or failed to comply with the conditions on which it was conferred on her.
In my view it follows from the previous paragraph that: (a) Cedric did not intend a partial intestacy in respect of the Toukley property, and consistently with the "golden rule", the second construction of cll 3(e)(vi) and 4 referred to in [36] above should be rejected, and (b) something has gone wrong with the drafting of clause 3(e)(vi).
Third, contrary to the defendant's submissions, in my opinion cl 3(e)(vi) is the more specific provision for the Toukley property for two reasons: cl 3(e) deals exclusively with the destination of the Toukley property and second, cl 4 only applies to the Toukley property through, and subject to the direction in, cl 3(e)(vi). The primary focus should therefore be on the operation of cl 3(e)(vi) rather than the more general terms of cl 4. This reflects the principle that the more specific provision of the Will should govern the general.
Fourth, the direction in cl 3(e)(vi) is just that - an instruction or command that while the remainder interest in the Toukley property is to follow the destination of the residuary estate, this is on the basis that the interest in residue in so far as the Toukley property is concerned shall "include a provision" that such interest is contingent on the beneficiary surviving the date of termination. The only way to give effect to that instruction or command where, as here, the right of residence has terminated under cl 3(e)(iv)(a) is to treat that "provision" as adopting the proviso to cl 4 as the destination of the remainder interest in the Toukley property, but subject to the additional requirement that it is only those persons nominated in the proviso who survive the date of termination who will take an interest. This is the fourth alternative construction at [36] above.
In my view, the fourth alternative construction is more consistent with the scheme of the Will and avoids the absurd result arising from the construction put forward by the defendant, and in Counsel's Advice, which effectively ignores the direction in cl 3(e)(vi) and indeed makes the regime of cl 3(e) as a whole redundant - if the property is to pass to Margaret under cl 4 on the date of termination it would not have been necessary to give her only a limited right of residence during her lifetime.
Fifth, it is accepted that a Court can, as part of the process of construction, read words into a will where it is clear on the face of the will that words have been omitted from the will and what those omitted words are. Reading words into or "moulding" the terms of a will in these circumstances to avoid an absurd and irrational result which would otherwise arise, when the will is read as a whole, is long established: see eg. in England: Re Redfern (1877) 6 Ch D 133 at 138; Re Smith [1948] Ch 49 at 53; Re Whitrick (deceased) [1957] 1 WLR 884 at 889, 891-892; Re Doland's Will Trusts [1970] Ch 267 at 274; in Australia: Towns v Wentworth (1858) XI Moore 526 at 543; 14 ER 794 at 800 (Privy Council); Fell v Fell supra, propositions [5]-[8]; Tatham v Huxtable (1950) 81 CLR 639 at 645 at 651-652; [1950] HCA 56 Re Whelan [1961] VR 706 at 710; In re Solomon [1946] VLR 115 at 120-121; Butlin v Butlin (1966) 113 CLR 353 at 357 and 362; [1966] HCA 4; Betts v Connolly (1970) 120 CLR 417; at 420-421, 427-428 and 428-429; [1970] HCA 18. As noted by Romer LJ in Re Whitrick (deceased) at 892, "it is not necessary … to know the precise language which the testatrix must be deemed to have had in mind; it is sufficient if one knows that she did intend to make a particular provision and what that particular provision was".
The process of correcting a will in this way as part of the process of construction of a will was explained by Barwick CJ in Butlin v Butlin (1966) 113 CLR 353 at 357: The occasions when a court supplies words when it is clear that words have been omitted, whether single words or words in the form of a sentence importing an additional provision into the will, are all, in my opinion, occasions for the discovery of a necessary implication, for a compelling and convincing inference from the terms of the will against the background of the facts as they were known to or conceived to be by, the testator. In supplying the omitted words or the omitted gift, where it is certain that there has been an omission, it is the disclosed intention, express or necessarily implied in what he has said, that is the only relevant factor. The Court is not authorized to supply the gift he might reasonably have made but the gift he has indicated that he did actually intend to make: see John Dyneley Fell v. David Fell (1922), 31 CLR 268, per Isaacs J., at pp. 274, 275, and authorities there cited.
In my opinion it is clear when the Will is read as a whole that Cedric intended to make a particular provision regarding the remainder interest in the Toukley property under cl 3(e)(vi) and what that provision was: the beneficiaries named in the proviso to cl 4 were to take the Toukley property following Margaret's death, but only if they survive her (ie. the fourth construction set out at [36] above). This can be achieved by adding to cl 3(e)(vi) after the words "to follow the destination thereof" the words "under, in both cases, the proviso to cl 4".
I have borne in mind that a Court does not lightly read words into a will, because the Court is entitled only to construe the will and not to remake it. However, in circumstances where it is clear from reading the Will as a whole that something has gone wrong, as I think it is in this case, the authorities at [69] above indicate that the Court can and should supply the omitted words to give effect to the testator's expressed intention determined in accordance with the principles referred to earlier.
The conclusion reached above is confirmed if regard is had to Cedric's two prior wills. Both parties accepted that the Court could have regard to Cedric's two prior wills under the armchair principle. In my view, that is correct as those wills are part of the surrounding circumstances known to Cedric when he made the Will and are therefore relevant context for the construction of the Will. Support for this view is found in Re Bowen (deceased) [1965] VR 113 at 117; Rawstron v Freud [2014] EWHC 2577 at [60]-[61]; Farrelly v Phillips (2017) 128 SASR 502, [2017] SASCFC 111 at [33]-[34] (earlier drafts of the final will); Marley v Rawlings [2015] AC 129, [2014] UKSC 2 at [20]-[23]; and Alexander Learmonth QC et al, Theobold on Wills (Thomson Reuters, 19th ed, 2021) at [18-003].
Under cl 4 of the 1986 Will, the persons identified as those intended to take the Toukley property on the termination of Margaret's right of residence are the same persons who are identified in the proviso to cl 4 of the Will, but were different from the persons entitled to take the residuary estate if Margaret predeceased Cedric under cl 6 of the 1986 Will. Under the August 1988 Will, that changed, and those two groups of beneficiaries became the same and it was that will which introduced cl 3(e)(vi) (in terms replicated in the Will). When regard is had to this history of Cedric's will making, an explanation for the drafting of cl 3(e)(vi) in both the August 1988 Will and the Will can be identified: it adopted a "short cut" drafting technique designed to incorporate by reference the persons listed in the proviso to cl 4 for the purposes of the gift in remainder under cl 3(e)(vi) because they were the same persons who had previously been selected in the 1986 Will as the persons to take the Toukley property on the termination of Margaret's right of residence. However, in doing so, a drafting error was made by the failure to appreciate that those persons appear in cl 4 in a proviso which, read literally, would not apply if Margaret survived Cedric.
Hence, Cedric's prior wills tend to confirm (and do not contradict) the conclusion I have reached on the basis of the terms of the will.

Conclusion

For the above reasons, the correct construction of the Will is that the "trusts and conditions" referred to in cl 3(e)(vi) of the Will are the trusts and conditions in cl 4(a) to (j) of the Will whereby the residue of the deceased's estate, after payment of all "just debts funeral and testamentary expenses probate estate death and other duties", is divided into nine equal parts and held on trust in such parts for the beneficiaries described in paras (a) to (i) of cl 4, subject to the relevant beneficiary surviving the death of Margaret Anne Astill on 9 May 2015.
In light of that conclusion, it is appropriate for an order to be made under s 138 of the Real Property Act 1900 to require the Registrar-General to amend the folio of the registrar maintained for 75/21204 so as to record in the First Schedule the plaintiff as the sole registered proprietor of the land.
As the parties wish to be heard on costs, I will stand the matter over for directions for the finalisation of the orders and the determination of costs. The parties are to bring in short minutes of order to reflect these reasons.

Amendments 11 April 2024 - Correction to typographical error in [43]: removal of 'the' before the phrase 'these and other relevant principles of construction'. 22 April 2024 - Correction to typographical error in [40]: 'Viscount Scott LC' replaced by 'Viscount Simon LC'. 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. Decision last updated: 22 April 2024

Family Provision Act 1982(NSW)

(2020) 104 NSWLR 155

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (11 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (20)