Harry Bernard Thynne v Jevny Pty Limited and Anor

Caveatable Interest?

1. For the reasons which follow, I find that Harry does not have a caveatable interest in Mona Road. The caveat must be discharged.
2. Harry argues that by the agreement constituted by the Memorandum, Victoria's interest in Mona Road acquired under the Will is held on trust for him and Patrick. His claim to beneficial ownership in this unqualified way is reflected in the terms of the caveat.
3. During argument, however, Counsel for Harry accepted that on their case, even under the terms of the trust said to be created by para 5, Victoria is entitled to sell Mona Road and use its proceeds to maintain herself, Patrick and Elanora. He argues that she can sell it or rent it, but she cannot mortgage it, and that the reference in para 5 to the Farm is a reference to the land which is Elanora alone, and not the farming business which is, and at all material times has been, carried on there.
4. It is to be observed para 5 does not in terms impress a trust on Mona Road, while in contrast, by cl 7, the deceased bequeathed the residue of his estate (that is, excluding Mona Road) on trust.
5. Paragraph 5 expressly permits Victoria to sell Mona Road. She agrees to leave any other property she has bought to replace it or the proceeds of sale of such property to Harry and Patrick at the time of her death. She is free to deal with Mona Road but is obliged to leave to Harry and Patrick what is left of it when she dies.
6. I interpolate that she accepts the obligation to make a will as required by para 5.
7. The situation here is, in my view, juridically on all fours with that described by Dixon J (as his Honour then was) in Birmingham v Renfrew (1937) 57 CLR 666, 689 as follows: There is a third element which appears to me to be inherent in the nature of such a contract or agreement, although I do not think it has been expressly considered. The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying. That is to say, the object of the transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose. But when he dies he is to bequeath what is left in the manner agreed upon. It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallize into a trust. No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified. But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor's own benefit and advantage upon condition that at his death the residue shall pass as arranged. See too Barns v Barns (2003) 214 CLR 169, 199-200 at [85] per Gummow and Hayne JJ.
8. Victoria has the floating obligation referred to by Dixon J which will crystallise into a trust on what is left of Mona Road or its proceeds on Victoria's death. Harry has no trust interest now.
9. There is no suggestion that Victoria is acting so as to defeat the intention of the compact. Indeed, under para 3, it was the deceased's wish for her to use her reasonable endeavours to ensure that the farm is operated on a financially stable and profitable basis from year to year, and not to sell it unless financially obliged to do so. Because Victoria can deal with Mona Road or its proceeds, and because (even on Harry's case) the proceeds of sale or rental can be used for Victoria's maintenance, Patrick's maintenance and education, and the maintenance of Mona Road and the Farm, the corpus of the trust (for which Harry contends) cannot be ascertained until Victoria dies.
10. Having found that there is no trust to support the caveat, it is not strictly necessary to consider Harry's submissions that the reference in para 5 to maintenance of the farm is to the land only, and that Victoria has no entitlement to mortgage Mona Road (as opposed to selling or renting it) to support the Farm. But I would reject both submissions.
11. Paragraph 3 makes it clear that in referring to the Farm, the deceased and Victoria had in mind both the land and the business conducted on it. The paragraph makes reference to the principal residence of the Farm. It gives her rights of management, maintenance and sale of the Farm. The distinction sought to be drawn by Harry between the land and the business operations on it, is artificial.
12. I reject the submission that Victoria can sell Mona Road to raise money to maintain the Farm but cannot mortgage it for that purpose, or for her maintenance or that of Patrick or of Mona Road itself. Mortgaging it involves a lesser disposition than selling it. If, contrary to my view, the terms of the Memorandum restrict Victoria in the manner in which she may deal with Mona Road as Harry suggests, this would in any event not translate into an equitable interest in Mona Road in Harry's hands, although it may be of the nature of an enforceable negative stipulation.
13. Finally, even if Harry had established an equitable interest in Mona Road, the caveat in its terms extends beyond any interest he claims and could not be permitted to stand anyway.

balance of convenience

1. Victoria argues that the Court should order withdrawal of the caveat in any event because the balance of convenience does not favour maintaining it.
2. If I had found that there was a caveatable interest, I would nevertheless have ordered removal of the caveat.
3. Victoria gives evidence about experiencing financial difficulties and that additional funds may be needed to carry the farm through to the next harvest. She also says that she needs access to additional funds to pay for this litigation. She was not cross examined, but her evidence does not extend to disclosing her actual financial position or that of the farm. Her evidence about the inconvenience caused by the caveat is somewhat thin. Nevertheless, it may be accepted that the caveat is causing her inconvenience. Harry, on the other hand, did not put forward any basis upon which convenience favoured extending the caveat, and the onus is his.

conclusion

1. The plaintiff is, within seven days, to withdraw caveat AS583181.
2. The plaintiff is to pay the second defendant's costs of this application. 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 December 2022