HATZANTONIS & ANOR v. LAWRENCECOX v. LAWRENCE [2003] NSWSC 914

JUDGMENT 1 HIS HONOUR: James Cushlar Lawrence, retired chauffeur, late of Willoughby, New South Wales, died on 20 May 1992 and probate of his last will dated 3 October 1991 was granted by this Court on 6 August 1992 to Wayne James Lawrence, his son, who is the defendant in these proceedings. The testator had four children, three of whom survived him namely the said Wayne James Lawrence and Mrs Coral Marjorie Hatzantonis and Ms Roma Rachael Lawrence, who are the plaintiffs in the proceedings 1898 of 2003. Another daughter Margot Lawrence married one Terrence Cox and died about 1987; she is survived by her three children Alison Brenda Cox, Julie Ann Cox and Stuart James Cox who are the plaintiffs in proceedings 3324 of 2003. All six persons were given benefits by the will. Each of these proceedings relates to the administration of the estate of the testator, and involves questions relating to the true construction, meaning and effect of his will. The two proceedings are to be heard together. On 29 September 2003 I ordered that before taking accounts the following question, which was raised by Claim 4 of the Summons dated 17 June 2003 in proceedings 3324 of 2003, be determined as a separate question:- A Declaration as to whether or not the proper construction and effect of the term "right of usage" as contained in Clause 4 of the Will of the late James Cushlar Lawrence dated 3rd October, 1991 Probate whereof was granted on 6 August, 1992: (a) entitles the Defendant to receive the income derived from the property being 10 Crabbes Avenue, Willoughby for the period 21 May, 1992 to 20 May 2002; and (b) causes the Defendant to be personally liable for payment of all rates, taxes and all other outgoings and expenses of 10 Crabbes Avenue, Willoughby for the period 21 May, 1992 to 20 May, 2002. 2 The operative provisions of the will were as follows: 1. I. HEREBY REVOKE all former Wills and Testamentary dispositions heretofore made by me and declare this to be my last Will and Testament. 2. I APPOINT my son WAYNE JAMES LAWRENCE of 1 A Wearden Road, Belrose to be Executor and Trustee of this my Will (hereinafter called "my Trustees") 3. I GIVE DEVISE AND BEQUEATH unto and to the use of my Trustee the whole of my estate both real and personal to hold the same UPON TRUST to be equally divided between my following children and grandchildren: WAYNE JAMES LAWRENCE, CORAL MARJORIE HATZANTONIS, ROMA RACHEL LAWRENCE, ALISON MARGOT COX, JULIE ANNIE COX, AND STUART TERENCE COX . 4. I DIRECT HOWEVER that my said son WAYNE JAMES LAWRENCE have the right of usage of my home at 10 Crabbes Avenue, Willoughby for a period of ten (10) years from the date of my death AND I FURTHER DIRECT that at the expiration of that period of ten (10) years or at such earlier time that my said son WAYNE JAMES LAWRENCE should determine at his sole discretion, that the said property at 10 Crabbes Avenue Willoughby be sold and the proceeds divided equally amongst the abovenamed beneficiaries who survive me. 5. I AUTHORISE my Trustee in his absolute discretion to invest any monies coming into his hands in his capacity of Executor and Trustee of this my Will in his own name as Trustee in any form of investment as he may think fit. 6. I FURTHER AUTHORISE my Trustee during the minority of any of my grandchildren taking under the Trusts off this my Will, to apply either the whole or part of the capital or the income or both of the share of any such grandchild in my personal estate, towards the education, maintenance, benefit and advancement in life of such grandchild. 3 Of course the period of ten years referred to in Clause 4 of the will has expired. The defendant did not at any time within the ten years determine that the property was to be sold. 4 When the testator made his will and also when he died about seven months later the most substantial asset in his estate was his home, the house property at Crabbes Avenue, Willoughby, which was valued by the executor in the inventory of property for the probate application at $300,000. The only other assets in the inventory were money in two bank accounts totalling $16,393.84, small investments the value of which totalled $859.38, and a debt of $4000 said to be a loan to Alison Margot Cox. There were insufficient liquid resources for convenient administration of the estate. The testator occupied the house at Crabbes Avenue, Willoughby, as his home for many years, some decades. Until he died the Cox children lived in the house with him. The eldest Alison Cox was born on 20 November 1971 and was 21 years of age when the testator died. Julie Cox was born on 3 December 1972 and was 20 years of age when the testator died. Both of them were adults at the time when he made his will. Stuart Cox was born on 20 January 1996; he was 16 years of age when the testator made his will and 17 years of age when the testator died. The Cox children had always lived in the house from the times they were born, with the exception of a period of four years from 1979 to 1983. They continued to live in the house until 1996, and there was conflict between them and the defendant relating to entitlements of the Cox children and of the defendant relating to the house. At one time they lodged a caveat claiming an interest in the house. I have been told that there was litigation in a Local Court between the defendant and the Cox children or some of them relating to a claim for payment in respect of the occupation of the house; that litigation is still pending. The defendant lived in the house in his childhood until, when he was 18 years of age about 1962, he moved out and lived elsewhere. He first bought a home when he was 21 and since then he has always lived in homes owned by himself and his wife. When the testator made his will and when the testator died the defendant was living in his own house at 1A Wearden Road, Belrose, and was not making any use of the house at Crabbes Avenue, Willoughby. 5 The separate question as framed is to be answered by decisions relating to the defendant's entitlement to receive income and liability to pay outgoings. It is not directly to be answered by a decision establishing the nature of his entitlement in relation to the house and classifying it as an equitable estate for life, or as a licence or permission conferred by the will. If the meaning and effect of the will are that he was to be treated as the equitable owner for a period of ten years or for such part of the period as he in fact lived there could be no doubt of his entitlement to receive income or of his liability to bear outgoings while he was equitable owner. Even if the will did no more than confer on him some licence or permission, the question is to be answered by determination of the effect of the licence or permission on entitlement to receive income. It is plain from the way the litigation has been conducted that after the defendant obtained actual possession of the house in 1996 he did in fact let the house out and receive income. In any fair accounting, if he was entitled to receive rent, or if he actually received rent or enjoyed the benefit of occupation, he should be charged with outgoings. It was not contended on his behalf that he could receive one benefit and not be charged with the corresponding outgoings. 6 In ascertaining the meaning of wills, consideration should in my opinion start with the fundamental rule stated by 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 "expressed intentions" of the testator. 7 In Perrin v. Morgan the House of Lords emphatically rejected the view that particular words, in that case the word "money", which are often encountered in wills acquire some fixed meaning from the process of repeated judicial construction. The view stated by Lord Romer at 421 to the effect that rules of construction should be regarded as a dictionary by which all parties including the courts are bound, although it was a qualified view, does not accord with the approach taken by other members of the House of Lords in that case, and it should respectfully be said that it does not well accord with the opening words of Lord Romer's speech at 420:- My Lords, I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. To understand the language employed the Court is entitled, to use a familiar expression, to sit in a testator's arm-chair. 8 Although the fundamental rule stated by Lord Simon was well established and had been clearly stated long before 1943, Perrin v. Morgan became something of a turning point in the construction of wills against the imposition of meanings established by previous decisions of courts. Judges are not engaged in an exercise of compiling a dictionary and teaching testators to use it. Lord Atkin's anticipation, at p415, may well have been fulfilled:- I anticipate with satisfaction that henceforth the group of ghosts of dissatisfied testators who, according to a late Chancery judge, wait on the other bank of the Styx to receive the judicial personages who have misconstrued their wills, may be considerably diminished. 9 Further insights are available from judicial authority into the fundamental rule stated by Lord Simons. 10 In Coorey v. Coorey (NSWSC 22 February 1986 unreported) Powell J said, in a passage which I set out in Perpetual Trustee Co. Ltd v. Wright & Ors Re Will of James Paul Gee Cox Junior deceased (1987) 9 NSWLR 18, at 33 "… It seems to me that one's task is, first, if it be possible, to ascertain what was the basic scheme which the deceased had conceived for dealing with his estate and then, so to construe the will as, if it be possible, to give effect of the scheme so revealed." Powell J made this observation after citations from 19th Century authorities dealing with the approach to be taken by courts in determining the meaning of a will. Powell J referred to some authorities earlier than Perrin v. Morgan in a passage at 12-14 which I set out in Perpetual Trustee Co. Ltd v. Wright & Ors at 32-33. Of particular significance is the following passage from the opinion of the Judicial Committee in Towns v. Wentworth [1858] 11 Moo PC 526 at 542-543; 14 ER 794 at 800: The rules of construction … do not seem open to any doubt. In order to determine the meaning of a will, the court must read the language of the testator in the sense which it appears he himself attached to the expressions which he has used, with this qualification, that when a rule of law has affixed a certain determinate meaning to technical expressions, that meaning must be given to them, unless the testator has by his will excluded beyond all doubt, such construction. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with such intention, though not sufficient to control it, or which indicate an intention which the law will not permit to take effect, such expressions must be discarded or modified; and, on the other hand, 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. The application of these rules is often attended with very great difficulty, as the number of cases found in the books upon the subject, not always very easily reconcilable with each other, sufficiently testifies … 11 A number of expressions in the will were referred to by counsel in submissions with contentions that they had some significance bearing on the nature of the defendant's entitlement. The defendant's counsel pointed out that in cl.1 the testator gave as the address of the defendant the house in Belrose where the defendant then lived, a house he in fact owned. That is to say, the testator knew of and adverted to circumstances which showed that the defendant did not have a need for a house to occupy himself. The plaintiffs' counsel pointed to the reference in cl.4 to the property at 10 Crabbes Avenue, Willoughby, as "… my home at 10 Crabbes Avenue, Willoughby …" and contended that in the context the reference to the property as a home showed the nature of the usage which was contemplated. 12 There are other aspects of the terminology of the will which were referred to and I regard as significant. Clause 3 speaks in terms of a gift, devise and bequest in language which is appropriate to confer an equitable interest on each of the six persons mentioned; the equitable interest is not in the house but in the proceeds of an equal division of the testator's property including the house, which must be understood as equal division of proceeds of its sale; cl.4 provides for sale of the house, and cl.3 can only be given practical operation if all the real and personal estate to which it applies is converted into money. A whole view of the will requires that cl.4 be looked at to find out when the sale is to happen, and when there is to be an entitlement to division. The right of usage in the first direction in cl.4 is something which has a part in determination of when the property is to be sold under the second direction; the sale so directed is to take place later in time than the expiry of the period of ten years, unless the defendant determined on an earlier time (and he did not). When cl.3 is taken with cl.4, it should be understood that there is not to be a division of the proceeds of sale of the house until after the directions in cl.4 have been worked through and the house has been sold. The order in which the dispositions are made in the will, in which cl.4 is later than cl.3, supports the view that entitlement to division under cl.3 will come about after the working out of the directions in cl.4. 13 The first express reference to disposition of the house at Crabbes Avenue, Willoughby is made in cl.4; it had earlier been referred to only when the testator stated his own address in the opening words and by the general reference to "the whole of my estate both real and personal" in cl.3. In contrast with the words of gift in cl.3, the benefit for the defendant referred to in cl.4 is conferred by a direction. There are two directions in cl.4, the direction for the defendant to have the right of usage and the direction for the property to be sold. The objects which these directions were intended to achieve include ascertainment of the time at which the property is to be sold. However that is not in my view to be regarded as the only object which the directions were intended to achieve. It was contended that the third word in cl.4 "however" is significant. To my mind the word tends to indicate that the provision made in cl.4 was seen as a qualification of the provisions earlier made. The directions in cl.4 operate as directions relating to the trust created by cl.3. Clause 4 establishes some of the terms upon which the trust is constituted, and has the effect that the trustee is authorised to do what the testator directs, notwithstanding that in the absence of such a direction it would be a breach of trust to do it, and notwithstanding that acting in accordance with the direction confers a personal benefit on himself. 14 Taking cll.3 and 4 together, the will made no arrangement for anybody except the defendant to have the enjoyment of any advantage relating to the house until after the right of usage conferred on the defendant had come to an end. I do not regard the right of usage as a qualification of or subtraction from an entitlement to ownership of the house, conferred in any form on any person or class other than the defendant. It was not provided by the words of cl.4 that the property was to be sold and the proceeds divided when or if the defendant ceased to use the home, or ceased to exercise the right of usage of the home. The property was to be sold and the proceeds divided after the expiration of the period of ten years from the death of the testator. The provision was more than a postponement of the sale while the defendant exercised his right of usage. In my reading of the will the basic scheme which the testator conceived for dealing with his estate was that for a period of ten years (or a shorter period, solely as decided by the defendant) the defendant would have a right related to the home, and it was only after the ten years that anyone else would get any benefit from the home. If anything is clear, it is that neither the Cox children nor any other beneficiary, other than the defendant, was given any right of usage of the house in any sense during the ten years. 15 I do not regard the reference in cl.4 to the house as "my home" as being of any significance in indicating the kind of usage to which it was intended that the right of usage should relate; the reference to "my home" does not carry with it any indication of an intention about whether or not the defendant was to use the house property as the defendant's home. The reference to the address of the defendant's home in cl.2, and the general circumstances in which the defendant and the testator stood at the time of making the will and also at the time of testator's death, are adverse to the view that there was contemplation that the defendant would need to or would or should use the property at Willoughby as his own home or residence. 16 As the plaintiffs' senior counsel said, the choice of the expression "right of usage" is idiosyncratic. It is not an expression which I have encountered in any other will. The expression indicates a right, which is something higher than a licence or permission. There is nothing in clause 4 or in the reference to usage which indicates that the usage or the only usage contemplated is residence in the home by the defendant. In particular the words "my home" do not indicate any such matter. There are many ways in which usage of a house can be exercised as a right. 17 Counsel on both sides made extensive reviews of case law in which courts have addressed wills containing recognisably similar expressions. In none of these cases was the expression "right of usage" considered, and the familiar limitations on the value of conclusions reached by courts in other cases, on the words of other wills, present themselves in their full obviousness. The decisions reviewed typically turned on the meaning of the very words used, and that meaning was not ascertained narrowly from expressions relating to directions, or rights of residence, or otherwise referring to opportunities to reside, or to use and occupy; the words used were addressed by courts in context, an important part of the context often being the terms in which other benefits were given in the same will. The case law cited to me appears to bear out an observation of Powell J in Binetter v. Dunkel (NSWSC unreported 28 May 1993) at 32 in which his Honour said: There appears, over the years, to have developed a rule of construction that, in the absence of a contrary intention, a devise of the "free use" or the "use and occupation" of land passes an estate in the land (see, for example, Rabbeth v Squire (1854) 19 Beav 170; 4 De G and J 406; Mannox v Greener (1872) LR 14 Eq 456; 47 LT 408; Coward v Larkman (1888) 60 LT 1; In re Gibbons; Gibbons v Gibbons [1920] 1 Ch 372; In re Johnson; Sawyer v Guthrie [1955] VLR 198; In the Will of Snadden Dec'd [1962] VR 571; cf Reid v Deane [1906] VLR 138; The Equity Trustees Executors and Agency Co Ltd v Buckhurst [1907] VLR 252; In re Anderson; Halligley v Kirkby [1920] 1 Ch 175), the estate, prima facie, being limited to the life of the devisee ( Re Coward (1887) 57 LT 285 (CA); Coward v Sparkman (supra) (HL)), whereas a direction to trustees to permit a named person to reside rent free, or an option to reside, is to be construed as a mere personal licence (May v May (1881) 44 LT 412; Stevenson v Myers (1929) 47 WN 94).

Although - since, prima facie, a "right to reside" is not to be equated to a life tenancy - one might be disposed to think that, in a case in which there is but a "right to reside", recurrent outgoings would therefore be a charge upon the income of residue, there appears to have developed a practice that, during such time as the right of residence is exercised such outgoings are payable by the person exercising that right (see, for example, Reid v Deane (supra); Re Reid [1943] SASR 254). 18 It cannot be said that there is a clear distinction between cases in which gifts of the "free use" or "use and occupation" of a house are seen as creating a life estate on the one hand, and gifts of a "right to reside" are seen as creating a personal right and not an equitable estate on the other hand. The rule of construction referred to by Powell J, which I would prefer to call a general disposition of courts, is no more than a broad generalisation. Furthermore the classification of the right conferred as an equitable estate or as something less is now of limited importance, as the defendant has survived for ten years and there is no need to determine whether the right of usage would have continued had he died. If he had an equitable estate the right to rent the property out would go with it, but even if the right were no more than a licence or permission, the question of importance is whether it was a licence or permission to rent out the property and retain the proceeds of letting for his own benefit. 19 In illustration of the importance of context, in Equity Trustees Executors and Agency Co. Ltd v. Buckhurst [1907] VLR 252 a gift in a will which contained the words "to use and occupy the property as a house for life" was held to confer no right to let out the property and receive rents and profits, largely because of the contrast between the expressions in which the right to use and occupy the property was given and more formal expressions by which clearly recognisable equitable estates were conferred. Cusson J at 257 made an observation which showed awareness that, in another context, these words could well have been held to convey an equitable life estate and to carry the right to take rents and profits. 20 The defendant's counsel cited a number of decisions in which gifts in terms which referred to "free occupancy", "use and occupation" and like expressions were held to confer estates in land, extending to the right to receive rents and profits. Of the many authorities cited by defendant's counsel I think it is sufficient to refer only to three. In Mannox v. Greener (1872) LR 14 Eq 456, a gift to a widow of "… the free occupancy of any house in my possession, for her life, free of any payments or charge whatever …" was held to entitle the widow either to reside in a house or to let it out during her life. 21 Observations in Re Keenan, Ford v. Keenan (1913) 30 WN (NSW) 214 at 215 (AH Simpson CJ in Eq.) appear to summarise well the general approach taken by courts:- Upon principle I should have said that the question whether Ms Stuart only has a right to occupy one of the cottages, 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.

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