Estate of JA Gilmore, deceased [2014] NSWSC 1263

Judgment 1John Alfred Gilmore ("the deceased") died on 22 July 2013, aged 77 years, leaving a Will dated 14 August 2007, probate of which was granted by this Court (on 23 May 2014) to the defendant, one of the two executors named in the Will. 2The deceased's place of residence, identified in the Will, was a rural property named "Tattykeel", at Oberon, in this State. 3The Will identifies the deceased's occupation as having been that of a "grazier". 4The homestead on "Tattykeel" was the matrimonial home of the deceased and the plaintiff, his widow. 5The second executor named in the Will, the plaintiff, did not join in the application for probate. The grant made in favour of the defendant reserved to her a right to come in and prove the Will. 6She has not exercised that right in circumstances in which, by a summons filed on 11 June 2014, she has applied in these proceedings for family provision relief under chapter 3 of the Succession Act 2006 NSW. 7At about the same time that she commenced these proceedings, the plaintiff (on or about 10 June 2014) lodged a caveat (allocated registered dealing number AI639809) against the title to "Tattykeel". 8In that caveat she claimed an "equitable interest", supported by the following statement of facts: "The Caveator, as a beneficiary under the Will of the registered proprietor who died on 22 July 2013, Probate of which was granted by Supreme Court NSW no 2014/103861 on 23 May 2014, including the right to life occupancy of the residential dwelling constructed on the said land". 9By a contract dated 30 June 2014 the defendant (as executor of the estate of the deceased) sold "Tattykeel" to two members of the deceased's extended family, James Graham Gilmore and Ross Gordon Gilmore ("the Purchasers"). 10The Purchasers are not named as parties to the present proceedings. However, the Court has been informed by senior counsel for the defendant that they have been informed of the pendency of the proceedings, and the possibility (openly canvassed in court on 4 September 2014) that they might, if so minded, apply to intervene on the hearing of the question of construction of the deceased's Will presently before the Court. No application has been made by the Purchasers to intervene, or to be heard, in the proceedings. 11Their joinder in the proceedings is not necessary for the proper determination of that question, or for any other purpose. Any claim they have to an estate or interest in "Tattykeel" must be made through the defendant, the vendor named in the contract upon the foundation of which such a claim would be based. For the purposes of the law of estoppel, they are privies of the defendant: Spencer Bower and Handley, Res Judicata (Lexis Nexis, London, 4th ed, 2009), para 9.38; Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers Appointed - In Liquidation) (1993) 43 FCR 510 at 539-542. 12It is not necessary, here, to recount the circumstances leading to execution of the contract, or its terms, beyond extracting clauses 47 and 48 of the contract: "47 Conditional Contract 47.1 The Vendor [the defendant] is selling the property in his capacity as Executor of the Estate of the late John Alfred Gilmore. 47.2 Prior to completion of the Contract the Vendor shall register a Transmission Application on the title to the property to secure the Certificate of Title in the Vendor's name to enable transfer to the Purchaser [sic]. 47.3 The property is presently occupied in part by Mrs Judith Gilmore [the plaintiff] the wife of the late John Alfred Gilmore pursuant to a Right of Residence provided for her by his Will. 47.4 Prior to completion the Vendor shall endeavour to obtain vacant possession of the property to enable it to be transferred in that manner. 47.5 The Purchaser [sic] is aware and accepts that completion of the Contract is conditional upon Special Condition 47.2 and the Vendor obtaining vacant possession of the property. 47.6 In the event the Vendor is unable to comply with the provisions of Special Conditions 47.2 and 47.4 within three (3) months from the date of this Contract, or such other period as the parties may agree in writing, either party shall by notice in writing to the other party be entitled to rescind the Contract in which event the provisions of printed Condition 19 of the Contract [providing for the service of a Notice of Rescission and the consequences of a rescission] shall apply. 48. Completion Date Subject to Special Condition 47 the completion date will be the earlier of: (i) three (3) months after the date of this Contract; and (ii) the date being fourteen (14) days after the Vendor provides notice in writing to the Purchaser that the Vendor has complied with the provisions of Special Condition 47.2, has obtained vacant possession of the property and is in a position to proceed to settlement. Provided however that the completion date shall not be earlier than the 35th day after the date of this Contract." 13Having contracted to sell "Tattykeel", the defendant served on the plaintiff a notice (pursuant to the Real Property Act 1900 NSW, s 74J) designed to cause the plaintiff's caveat to lapse. 14That caused the plaintiff, on 26 August 2014, to file a notice of motion seeking an order (pursuant to the Real Property Act s 74) that the operation of the caveat be extended. 15That notice of motion came before me, as Duty Judge, on 4 September 2014, at which time, after debate between bench and bar, it was agreed that there would be utility in deciding a question of construction of the Will as a separate, preliminary question. 16In order to facilitate that course, within the context of the Duty Judge list, and allowing the parties an opportunity to advance both written and oral submissions, the plaintiff amended her summons to identify separate questions; the proceedings were adjourned to 12 September 2014, with directions for the filing and service of written submissions; and the operation of the caveat was extended until the end of 16 September 2014. 17The question stated for separate determination, and heard by the Court (with the benefit of written submissions) on 12 September 2014, was encapsulated in the following prayers for relief in the amended summons (formally filed on 12 September 2014) "The plaintiff claims:... 1A A determination whether clause 6 of the Will of the deceased, and in particular, whether the use of the words 'continued right of occupancy', gives to the plaintiff a life estate, or some other interest, or licence, in the estate realty. 1B A declaration as to the interests or other entitlement of the plaintiff in the estate realty." 18At the invitation of the defendant, the amended summons included an additional prayer for relief, seeking "a declaration whether, in the course of administration of the estate of the deceased, the defendant is entitled to sell the estate realty to pay funeral and testamentary costs, expenses, and the costs of these proceedings". 19Although the defendant's preferred course was for that claim for relief to be the subject of an order for a separate, preliminary determination, I was not satisfied that its subject matter permitted the making of an order for its separate, preliminary determination. 20The only topic amenable to a separate determination, in my judgement, is one confined to the proper construction of clause 6 of the Will. 21Clause 6 of the Will (and clause 7, to which both sides of the record have referred in their written submissions) are in the following terms: "6. I DIRECT that JUDITH GILMORE [the plaintiff] shall have the continued right of occupancy of the main house on "Tattykeel" together with approximately three acres abutting the adjacent road but excluding the sheds and yards etc. to the rear. She shall be entitled to occupy the house and that area for as long as required by her. All expenses and costs pertaining to the running of the homestead shall be incurred by the company Tattykeel Pty Limited until my wife JUDITH GILMORE moves from the homestead. 7. I GIVE DEVISE AND BEQUEATH the rest and residue of my estate equally to my three sons GRAHAM JOHN GILMORE, IAN RODNEY GILMORE and MARTIN ANDREW GILMORE or to whichever of them shall survive me in equal shares as tenants in common but charged with the duty by them to make payment of the specific bequests set out in clauses 3 and 4 of this my Will such payments to be made within three (3) months of my death. I also charge this gift to them with the payment by them to my wife JUDITH GILMORE of the sum of six hundred dollars ($600.00) per fortnight in advance commencing from my death until she vacates the main house on "Tattykeel" referred to in 6 above." 22The parties are agreed that the question stated for separate determination can, and should, be determined without any need for evidence extrinsic to the deceased's Will, beyond due recognition that: (a)the plaintiff is the widow of the deceased. (b)"Tattykeel" is a rural property, a working farm. (c)the main house on "Tattykeel" ("the homestead") was the matrimonial home of the plaintiff and the deceased, and had been for some time, at the time of the deceased's death. (d)the deceased was aged 77 years at the time of his death. (e)the plaintiff was, at that time, aged 69 years. (f)the title to "Tattykeel" was at all material times registered in the name of the deceased, alone, as proprietor of an estate in fee simple. (g)the deceased's Will was drafted by a solicitor. (h)"Tattykeel" has at all material times comprised approximately 112.6 hectares (about 278 acres) of which the area described in clause 6 of the Will of the deceased as "approximately three acres" is, and was at all material times, a part. 23The respective submissions of the parties as to the proper construction of clause 6 of the Will have been substantially reduced to writing. The plaintiff's submissions are found in an undated document, comprising 12 pages, entitled "Plaintiff's Submissions on questions of constructions [sic]", signed by counsel for the plaintiff. The defendant's submissions are found in a document dated 11 September 2014, comprising eight pages, entitled "Submissions by Defendant concerning Construction of clause 6", signed by counsel for the defendant. 24The key difference between the parties focuses on that part of clause 6 found in the first two sentences. 25The second part of clause 6 (found in the third and last sentence) provides necessary context for the proper construction of the clause as a whole but, counsel agree, it is not necessary, in the current judgment, to make any determination about whether, or not, the "expenses and costs pertaining to the running of the homestead" are to be borne by Tattykeel Pty Limited whenever the plaintiff personally occupies "Tattykeel", or only until such time as she might initially cease to occupy the homestead personally. If a determination about that issue is required, the parties are agreed that it can be left for determination at a later time. 26In essence, the plaintiff's contention, is that: (a) in the context of clause 6, the word "occupy" must, on established authority, include a right to "occupy" the subject property personally or by a tenant; and (b) that right amounts, in substance, to a proprietary right in the nature of a life estate. 27The line of authority that supports this contention is sometimes grounded upon observations made in Re Keenan; Ford v Keenan (1914) 30 WN (NSW) 214 at 215 where (with emphasis added) AH Simpson, CJ in Eq, said: "Upon principle I should have said that the question whether [a person in the position of the present plaintiff] has only a right to occupy one of the cottages [on land the subject of those proceedings], or has a right to let it during her life, turned on the words of gift. If the words used, or anything in the Will, imply that a personal right only is given, the gift must be confined to that. A direction that a person may reside or live in a house prima facie confers a personal right for a man cannot reside by deputy. But a right to use and occupy, or to occupy only, stands on a different footing for a man can ' occupy' by himself or a tenant. ..." 28Those observations, or observations to similar effect, can be found in a number of cases including Perpetual Trustees WA Ltd (as Executor of the Estate of Darvell) v Darvell [2001] WASC 123 at [5]-[6]; Re Estate of Lawrence (Dec'd); Hatzantonis v Cox; Cox v Lawrence [2003] NSWSC 914 at [17] and 25 (where Bryson J quoted observations of Powell J in Binetter v Dunkel (unrep, 28 May 1993)); White v Arizon Pty Limited [2003] NSWSC 1051 at [20]; and Batey v Potts [2004] NSWSC 606 at [25]. 29In essence, the plaintiff contends, and the defendant denies, that the word "occupy" and its derivative ("occupancy") in clause 6, read in the context of the Will as a whole, confer on the plaintiff a proprietary (rather than merely a personal) right that entitles her to occupy the homestead personally or by a tenant, and, if the property is let out, to retain rent. 30The plaintiff accepts that, if she were to let out the homestead with an entitlement to retain rent, she would be obliged to bear recurrent expenses associated with the homestead, and she could not (at least for the period of her occupancy of the homestead by a tenant) call upon the residuary beneficiaries to meet "all expenses and costs pertaining to the running of the homestead", to use the language of the last sentence of clause 6. This is consistent with Powell J's observations in Binetter v Dunkel, extracted in Re Estate of Lawrence (Dec'd) [2003] NSWSC 914 at [17]. 31There is no dispute between the parties as to the principles to be applied in the construction of the Will. They have recently been restated by Hallen J, in Warton v Yeo [2014] NSWSC 494 at [52]-[54 ], by reference, inter alia, to observations made in Fell v Fell (1922) 31 CLR 268 at 273-275 and more recent caselaw. 32There is no dispute that each case must be determined on its own facts and that the deceased's Will must be read as a whole, and with regard to its structure. 33The task of the Court is not merely, or ultimately, to apply "rules of construction", but to ascertain the intention of the testator. 34The language of the deceased's Will does not provide an exact fit with any of the cases cited, notwithstanding the resonance the word "occupy" has with the statement of principle in Re Keenan. 35Nevertheless, with some (but not determinative) force, the plaintiff points to the fact that the Will was drafted by a solicitor, who might reasonably be taken to have used the words "occupy" and "occupation" cognisant of the distinction, between a proprietary right to occupy and a personal right of residence, noted in Re Keenan. 36Whatever (if any) weight be given to that factor, the scheme of the Will contemplated that the plaintiff would be left with security of accommodation (clause 6); "any of the furniture and contents within the home 'Tattykeel' she wishes to have" (clause 5); a capital sum of $300,000 by way of a legacy (clause 4); and an income stream from the deceased's sons (the residuary beneficiaries) "until she vacates the main house on 'Tattykeel'" (clause 7). 37Whether or not the provision made for her in the Will is "adequate" (within the meaning of s 59(1)(c) of the Succession Act) can be left to that part of these proceedings in which the plaintiff's claim for family provision relief falls to be considered. 38What is apparent in the scheme of the Will is an intention on the part of the deceased that the plaintiff be secure in her right to accommodation referable to "Tattykeel". That intention bespeaks of a proprietary right, and is inconsistent with a mere personal right amounting to no more than a mere licence. 39Use of the word "occupy" and its derivative "occupation", with the meaning acquired by the word "occupy" through the line of authorities associated with Re Keenan, is confirmatory of that intention. 40The deceased's gift of a "continued right of occupancy" in their matrimonial home is not a mere personal right, but is a right proprietary in nature. 41It is not necessary to consider whether it has all the incidents of a life estate. It is sufficient to notice that an occupant of property may occupy the property personally or by a tenant, with a right to receive rents and profits of the tenancy. It is a right in the nature of a life estate. It is a right capable of being maintained against successors in title of the deceased. It is a right capable of sustaining a caveat. 42The parties have agreed that, should the Court reach that conclusion, the relief to be granted should include, primarily, a declaration giving formal expression to the conclusion, and an order that the plaintiff's caveat be extended until further order. 43As discussed between counsel, I propose to reserve the costs of this phase of the parties' litigation in order to avoid an unnecessary appearance for the purpose of arguing the question of costs. The plaintiff seeks, not only an order that she be awarded costs against the defendant, but also an order denying him a right of indemnity from estate assets. The defendant, for his part, does not resist an order for costs in favour of the plaintiff, but does insist upon an order recognising his right of indemnity, notwithstanding his broader contention that the property "Tattykeel" needs to be, or should be, sold to pay funeral and testamentary costs, expenses and the costs of these proceedings. This is a debate which can, and in my opinion should, be had, in the context of the principal, family provision proceedings, at a later time. 44With the acquiescence of counsel, I propose to order that the principal proceedings be listed before the Family Provision List Judge for directions on 17 October 2014, reserving to that Judge an acknowledged entitlement to order that that date be changed to accommodate the conduct of business in the Family Provision List.