Gellert v Viselle

Judgment 1This case concerns the construction of the will dated 27 May 2002 of the late Eve Veronica Schwartz ( the "Deceased" ) who died on 20 August 2005. Probate of the will was granted to the plaintiff, Mr Robert Gellert, on 28 July 2006. Mr Bruce Robinson, the other executor named in the will, renounced probate. 2The proceedings commenced as a common law claim for possession of a property at 28 Pacific Street, Bronte ( the "Bronte Property" ) which was an asset in the estate of the Deceased. The Bronte Property is occupied by the defendant, Ms Liliane Viselle, who is the former de facto partner of Jerry Leslie Schwartz ( "Dr Schwartz" ), the son of the Deceased and who is also the first cross-defendant in these proceedings. Mr Gellert is the second cross-defendant. 3The estate is a large one of over $70 million. Paragraph 2 of the will provides: " I APPOINT BRUCE ANTHONY ROBINSON of Level 1, 18 McFarlane Street, Merrylands, Accountant and ROBERT GELLERT of 9 Bronte Road, Bondi Junction, Solicitor as joint Executors of this my Will and Trustees of my estate ("the Trustees")." 4Paragraph 4 of the will, after giving a number of pecuniary legacies, provides: "I GIVE: ... (c) THE residue of my estate to my Trustees UPON TRUST to be held on the terms of the trusts set out in the Schedule hereafter." 5In the Schedule to the will, a discretionary trust is created under which persons falling within the definition of "Beneficiaries" are entitled to receive benefits at the discretion of the trustees. "Beneficiaries" is defined in clause 1.1 of the Schedule as: "(a) my grand-daughter SOPHIE BENTWOOD , her spouse (including de facto partner) and her descendants; and (b) my son JERRY LESLIE SCHWARTZ, his spouse (including de facto partner) and his descendants." 6The vesting date of the trust is the earlier of 80 years from the date of death or any other date the trustee nominates. "Descendants" is defined to include children and grandchildren and further issue whether born naturally or adopted. The trust provisions include: (1)a requirement to distribute income in each year of income but with a right to determine to accumulate, and in default of a determination as to distribution or accumulation, the trustee must distribute the unpaid or non-accumulated income to the beneficiaries then alive in equal shares (clause 2 of the Schedule); (2)a requirement to distribute capital on the vesting date to such one or more beneficiaries as the trustee determines, and in default of determination, to the beneficiaries then alive in equal shares (clause 3 of the Schedule); and (3)a power to allow any beneficiary to occupy or use any property in the fund with or without payment of rent. 7In her defence to the possession proceedings, the defendant sets up a defence of estoppel by representation on the basis of a claimed representation by the Deceased to her that if the defendant left her protected housing and moved to the Bronte Property, she would be able to remain in the Bronte Property until Dr Schwartz transferred into her name a property at 3/16 St Thomas Street, Bronte ( the "Bronte Unit" ), and further, until Dr Schwartz had fully restored that unit, and constructed a balcony and a room underneath the garage which he had agreed to do as part of their Cohabitation Agreement. Ms Viselle says that although the Bronte Unit has been transferred to her, the renovation work has not been done so that the executor is estopped from asserting the claim for possession of the Bronte Property. 8Paragraph 30 of the amended defence is as follows: "Gellert, as the trustee of the Eve Schwartz' estate has, pursuant to paragraph 5.15 of the Testamentary Trust, the discretion to allow a beneficiary to occupy or use a property of the trust for a period and/or indefinitely with or without rent." 9In her amended cross-claim, so far as it is made against Mr Gellert, Ms Viselle seeks declarations: (1)that in his decision to commence the proceedings he did not properly exercise his discretion as trustee and accordingly, (2)the decision to commence and continue the proceedings is in breach of trust. In addition an order is sought that Mr Gellert be removed as trustee. 10In her amended cross-claim, Ms Viselle pleads that at the time of the execution of the will and at the date of death and until 19 August 2008, she was the de facto partner of Dr Schwartz and accordingly she is a beneficiary of the trust. 11On 26 May 2011, I made an order that the following question be heard and determined separately from and before any other question in the proceedings: "....whether: ... On any date after 19 August 2008 the Defendant Liliane Viselle was eligible to be considered as a person upon whom the Plaintiff, Robert Gellert, as trustee of such will trust might, in his discretion, confer a benefit in accordance with clauses 3 or 4 of the schedule to the will constituting such will trust" It is apparent that there was an error and that the relevant clauses should be clauses 2 and 3 which relate to the distribution to beneficiaries of capital and income, and not clauses 3 and 4. I proceed on the basis the order will be amended. 12Some facts are agreed for the purpose of this separate question and some are admitted on the pleadings. So far, as they are relevant and not already stated, they are: (1)Ms Viselle and Dr Schwartz moved into the Bronte Property on 7 January 2004 and began living there as their home. On the same day, the defendant entered into a Binding Financial Agreement and Cohabitation Agreement with Dr Schwartz. The relationship existed up to the date of death of the Deceased; (2)that at the date of the will, Dr Schwartz was aged 46, had been once married, had no children, had been divorced on 4 July 2002, and that unless he was in a de facto relationship with Ms Viselle he was not in such a relationship with any other person; (3)on 19 August 2008, Ms Viselle and Dr Schwartz ceased to live in a de facto relationship and from that date, the defendant ceased to be a de facto partner of Dr Schwartz; (4)on 27 May 2002 the Deceased had two children only: (a)Judith Joan Bentwood (the mother of Sophie Bentwood) born 19 June 1953; (b)Jerry Leslie Schwartz, the first cross-defendant, born 2 February 1956; and (5)Sophie Bentwood was 13 years of age at the date of the will. 13There is no agreement as to whether the de facto relationship between Ms Viselle and Dr Schwartz existed at the date of the will. 14It is accepted that the defendant was a beneficiary within the meaning of the Schedule at the date of death of the Deceased. However, the residuary estate was not determined until the executorial duties had been completed and that date is not agreed. Whether the defendant remains a beneficiary after 19 August 2008 15It is a settled principle of law that the Court's task is to give effect to the intention of the testator. The relevant intention however is not that which was actually in the mind of the testator at the time the will was made. The meaning of the will should be found from the writing in the will itself, relying only on such extrinsic evidence as is necessary to comprehend the words used by the testator: Fell v Fell (1922) 31 CLR 268 at 273 per Isaacs J. 16Mr D Grieve QC, senior counsel for the defendant, submitted that the testatrix must have intended to benefit the defendant because the testatrix "held our client in fond affection regardless whether the relationship [with Dr Schwartz] existed indefinitely". However, there was no evidence of this before me. It is accepted of course that usually, as a matter of construction, even if not as a matter of law, a gift in a will to "my son's wife" is a gift to the wife at the date of the will, but if there is no wife at the date of the will but there is one at the date of death the gift will go to the wife at the date of death: see Jaques v Seton (1960) 103 CLR 511 . 17The question here is whether, under the definition of "Beneficiaries" the words "my son JERRY LESLIE SCHWARTZ, his spouse (including de facto partner) and his descendants", so far as "spouse" is concerned, denotes a particular person or is a descriptive word and "if the latter, whether the description is to apply at some and what particular point of time or event other than the date when the will was made": see Jaques v Seton at 518. It would of course be easier to decide this had the question of relationship at the date of the will been determined, but to make the separate question useful I proceed on the assumption (which may well be incorrect) that there was a de facto relationship at the date of the will, there being no doubt that Ms Viselle was Dr Schwartz's de facto spouse at the date of death. 18Mr Grieve, in addition to the designated person argument, submitted that the class of beneficiaries, so far as it concerns spouses, closes at death, and that once a person is within the class, she remains there till the vesting date or until her death whether or not she, as a result of subsequent events, no longer falls within the class as defined, and whether or not another person falling within the description of "spouse" or "de facto partner" of Dr Schwartz comes on the scene. 19I think there are a number of factors which point to the words being descriptive, rather than identifying a particular person. The first is that apart from the named beneficiaries, the words in clauses 1.1(a) and (b) of the Schedule are the same, substituting "his" for "her" where necessary. Sophie Bentwood was 13 years of age when the will was made. The words are clearly descriptive not personal so far as clause 1.1(a) is concerned. This points to the words being considered in the same way in clause 1.1(b). 20The second point is that the dispositions come as a result of a testamentary discretionary trust which has a possible term of 80 years. Provisions as to the disposal of income require distributions to be made each year among the beneficiaries, but at the discretion of the trustee. Beneficiaries are, of course, strictly objects of the power rather than beneficiaries as they have no right to take. This is a very different position from that which arises from a strict settlement where beneficiaries are identified and take an interest in the fund. Thirdly, if the interpretation sought by Ms Viselle is correct, then if Dr Schwartz marries or enters into a new de facto relationship, the spouse or de facto spouse would not be a beneficiary under the testamentary trust. The wording would not allow of two spouses. After consideration I have come to the conclusion the words are descriptive and would be so whether or not the defendant was in a de facto relationship with Dr Schwartz at the date of the will. 21Although these matters point towards the words being descriptive rather than designating a particular person, it is still necessary to determine whether or not a person who falls within the description at the date of death ceases to be an object of the trust if the description no longer applies to her. Although it seems strange, counsel were not able to refer me to any case in which a similar question had been decided and my research has not found any. However, the factors discussed in [20] above do, I think, point to an ambulatory interpretation with the objects being determined at distribution date, or perhaps more correctly, at 30 June of each year. If the objects of a discretionary trust were the government employees working in the Supreme Court Registry I consider that the objects would be determined each time the discretion came to be exercised. I have considered whether the words "then alive" point either way. They obviously require determination of the objects at the time of exercising discretion but I do not consider they require a construction of once a spouse always a spouse so as to exclude future spouses. 22Mr M Willmott SC, senior counsel for the plaintiff, made reference to the case of Re Drew [1899] 1 Ch 336 where the testator provided, inter alia, a life interest to his son B, and after B's death "unto the wife of my said son for and during her natural life...", and after her death the remainder for B's children. At the time of making of the will B had a wife living and she was also living at the time of the testator's death. However she died some time afterwards. Subsequently B married again, and the question in issue was whether his second wife, having survived him, was entitled to the share of the income under the testator's will. The will provided for the determination of the son's interest in the event of bankruptcy upon which event the trustees would hold the fund on what could be described as protective trusts "for the purpose of applying the same in or towards the maintenance and support of my said son Beriah Harvey Drew his wife and children at such time or times and in such manner and in such proportions as the trustees or trustee shall in their or his entire discretion think fit". The son did not become bankrupt. Sterling J determined the second wife was entitled during her life. To some extent he relied upon the protective provision and also upon the fact that children of either marriage would take. In the present case, the first matter relied upon does not arise and of course there is no need for it to do so in the case of a discretionary trust; but the second matter does arise as there is no doubt that any children of Dr Schwartz, whenever born, would be objects of the trust. However Re Drew was discussed in Re Harper; Trustees, Executors & Agency Co Ltd v Harper [1940] ALR 178, where it was held the second matter would not itself overcome the usual rule of construction but as there was also a discretionary trust in the event of bankruptcy, Re Drew was followed. Neither of these cases determines the question here: each decision was one of the construction of the words of the will. It seems strange but counsel were unable to point to any case decided upon facts similar to those here and I have not been able to find any. 23It is a question of deciding the intention of the testatrix from the words of the will in circumstances where a discretionary testamentary trust is created. I have come to the conclusion that the intention of the testatrix, as shown by the words in the will, was that Ms Viselle would cease to be an object of the trust upon the de facto relationship with Dr Schwartz coming to an end and she will remain in that position unless she marries Dr Schwartz or enters into a new de facto relationship with him. 24As this separate question has proceeded in the nature of a construction suit where the executor has been the contradictor, it seems the proper order for costs would be that the costs of the parties come out of the trust fund, those of the trustee on the indemnity basis. Orders 25Orders as follows: (1)Amend orders made on 26 May 2011 by deleting the words "clauses 3 and 4 of the Schedule" and inserting in lieu "clauses 2 and 3 of the Schedule". (2)Answer the separate question: No, unless the defendant marries Jerry Leslie Schwartz or enters into a new de facto relationship with him. I direct that answer be recorded. (3)The costs of both parties of the separate question be paid out of the fund held on testamentary trusts, those of the plaintiff on the indemnity basis.