Hibbitt v Ziade [2022] NSWSC 904 | Case summary

Judgment (7 paragraphs)

[1]

Judgment - EX TEMPORE Revised from transcript and annotated; issued 6 July 2022

These proceedings concern the administration of the estate of the late Valerie Anne Thorburn (known as Anne Thorburn), who died in January 2020 at the age of 75 or 76. The testatrix had no close relatives. She had lived in a de facto relationship for twenty years with a de facto partner, Robert Smith but he pre‑deceased her. He died in September 2009.
The deceased's will was made in September 2019 in which she appointed her friend Richard Ziade as her executor and trustee. He is the defendant in the proceedings.
The deceased, when she died, was living alone with two cats for company. The deceased greatly loved the cats, which had been given to her by Mr Smith. She called them Bonnie and Clyde.
In her will the deceased made a gift of her home to Christopher Brian Hibbitt and his wife Larraine Phyliss Hibbitt. Mrs Hibbitt had been a close friend of the testatrix since they were teenagers. The Hibbitts are the plaintiffs in the proceedings and the major issue concerns the interpretation of the gift.
The provisions of the will fall into three main parts, each corresponding with a different part of the deceased's estate. First, the deceased left seventeen bequests of $225,000 each to close friends of hers, who included Mr Ziade and the Hibbitts. She also left seventeen bequests of $20,000 each to other friends and relatives. These bequests were roughly equivalent to the money that the deceased held in bank accounts and on deposit.
Secondly, the deceased held sixteen substantial parcels of shares. Of those she gave fourteen parcels to specified charities, one for each charity.
Thirdly, clause 21 of the deceased's will dealt with the "rest and residue" of her estate. The main remaining asset in the deceased's estate was her house at Tennyson Point, which is near Gladesville in Sydney. The property was at the time of her death worth several million dollars. Clause 21 relevantly provided: I GIVE the rest and residue of my estate to my Trustee:- (a) to pay all debts, funeral and testamentary expenses and any death, estate or succession duties; and (b) to hold my residence at [XX], Tennyson Point together with all personal effects contained therein to [Mrs Hibbitt and Mr Hibbitt] or the survivor of them in return for caring for my two cats. (c) to hold the balance then remaining to be divided equally between [the thirty-four legatees who received cash bequests of $225,000 or $20,000].

Evidence of deceased's intentions

The documentary evidence which was provisionally admitted under s 32 consisted of emails passing between the deceased and Mr Anthony Ziade and draft versions of the will and file notes made by him. The earliest communication to which I was referred took place on 16 August 2019 at 4.01pm. It was an email from the deceased to Mr Ziade attaching an initial draft will she had prepared.
The second clause in the will, which appeared immediately after the appointment of the defendant as the executor, and before the cash and share legacies, dealt with the Tennyson Point property. It relevantly stated: I GIVE to my dear friends, [Mrs and Mr Hibbitt], my freehold residence at [XX] Tennyson Point, together with all personal effects therein.
On 20 August Mr Ziade prepared a draft will on his word processing system. It did not include any provision about the Tennyson Point property. The deceased emailed Mr Ziade on 3 September attaching a further draft will of her own. The clause concerning the Tennyson Point property was modified so as to refer to the Hibbits looking after the cats. It stated: I GIVE to my dear friends, [Mrs and Mr Hibbitt], my freehold residence at [XX] Tennyson Point, together with all personal effects contained therein in return for caring for my two cats.
On 6 September, the deceased sent a further email to Mr Ziade attaching a further draft will. The clause concerning the Tennyson Point property was unchanged.
In evidence is a transcription of a note made by Mr Ziade of a conversation with the deceased on 12 September. The note relevantly states: - Need to be sure sufficient funds to meet the bequests, debts, tax and the like. - Future health and medical needs and her care. - Home help like mum. - May not have enough. - Put home in residue for Hibbitts. - Look after cats. - What if they don't. - I have to trust them. - Wanted to give RZ home but he not a cat person. … - I'll amend. - If money left over give it to the other beneficiaries. - Big job!!.
Following this conversation, Mr Ziade prepared a further draft of the will on his word processing system. The draft introduced clause 21, dealing with the "rest and residue" of the estate, and sub-clause 21(b), dealing with the Tennyson Point property, in essentially the same form as in the executed version (quoted at [7] above).
On 16 September, there was a further conversation between the deceased and Mr Ziade. The transcription of Mr Ziade's note reads: "Care for cats?" Vague - need to be spelt out. When are they to receive home? On death of cats - what if killed? After bequest? Syd/WA? Need clarify. She and they spoke and they know home for care of cats. I need to re-draft. Is it conditional? No they promised to look after cats for home. How to trust them if they don't? Trust Larraine to keep her word. No-one else to look after cats. Leave "caring for cats" in they know. Don't change it. If they don't look after cats nothing I can do.
The will was executed four days later, on 20 September. There were some minor modifications to clause 21, but not of any substance. Clause 21(b) appears to have been unchanged.
An affidavit was also filed from Mr Ziade. He referred to his communications with the deceased and gave his version of the two conversations on 12 and 16 September which are recorded in the notes which I have quoted.
Mr Ziade confirmed that on 12 September he advised the deceased that it was necessary to ensure that there would be sufficient money to cover the administration costs and all of the bequests, and the Tennyson Point property should be made available, if necessary, for that purpose. The deceased agreed.
According to Mr Ziade the conversation continued: … Anne also said "Whatever is left over from the home is to go to the Hibbitts for looking after my cats". I said "What if they don't look after the cats? Anne said "I have to trust them. I wanted to give Richard [the defendant] the home but he is not a cat person". … I then said "I will amend the Will". Anne said "If any money is left over divide it between all of the people I am giving money to". I said "That will be a big job".
Mr Ziade's version of the conversation on 16 September was: … I said "I'm concerned what 'in return for caring for my cats' means". I also said "It is vague and needs to be spelt out. When are the Hibbitts to receive the home? Is it on the death of the cats? What if they are killed? Or are they to receive the home after the bequests are paid? Where are they to look after the cats, in Sydney or WA? You need to clarify when the home is to be transferred to them". I also said "What if the home is transferred to them and they don't look after the cats, give them away or worse, kill them? Anne said "I have spoken to Larraine and Chris. They know how I want them to look after the cats. They know I am giving them my home because they agreed to look after the cats". I said "I need to re-draft that clause. Do you want the gift of the home to be conditional? The Will needs to make it clear when they are to receive the home. Is it to be before or after the cats die?". Anne said "No, I don't want the clause changed. They promised to look after the cats. That is why I'm giving them the home". Anne said "I trust Larraine to keep her word. She has been my friend for a Jong time. I have no-one else to look after the cats. I don't want to change the wording. If they don't look after the cats there is nothing else I can do. Just leave the clause the way I drafted it. I have to trust them to keep their word".
An affidavit was also read from Lisa Jane Thomas, who was a friend of the deceased. Ms Thomas confirmed that the deceased was concerned about what was to happen with the cats after her death. Ms Thomas deposed: During our conversation the Deceased said words to the following effect: I'm so relieved. Chris and Larraine have agreed to stay here and look after my cats until they are gone so I've made all the necessary arrangements. And: Nothing needs to change for Bonnie and Clyde when I'm gone.
There was also evidence from the defendant about discussions which he said he had with the deceased, in about July 2019, around the time of the deceased's initial discussions with the Hibbitts. In his affidavit, he said: … In or around early July 2019, after the deceased decided against any further surgery to treat her cancer, she said words to me to the following effect: "I am concerned for the future welfare and wellbeing of my cats after my passing. I am concerned what will become of the cats. I don't think any of my friends will want to care for the cats. I want the cats to remain in my house and be cared for until their passing. I am thinking of asking Larraine and Christopher if they will care for the cats and in return, following the passing of the cats, I will bequeath them the house". In response to the above, I said words to the following effect: "Will you make the same offer to the RSPCA or the Royal Cat Society if the Hibbitts do not take up your offer?" The deceased replied with words to the following effect: "Yes, I will, if the Hibbitts do not take up my offer". Around a day or two thereafter, in the course of one of our daily private discussions, the deceased said words to me to the following effect: "I had a discussion with the Hibbitts and told them that if they agreed to remain in my house following my death in order to care for the cats until their death then I would leave the house to them. Larraine was hesitant and non-committal because it will entail long-term and long-distance separation from her family. Christopher, on the other hand, was agreeable". Around a day or two later, the deceased and I had a conversation to the following effect: The deceased: "Larraine and Christopher have agreed to accept my offer". Me: "That is wonderful of them considering that it will entail separation from their family in Perth for an unspecified time". The deceased: "They will be handsomely rewarded".
Both Mr and Mrs Hibbitt gave evidence setting out their versions of the conversations with the deceased in July 2019. They were cross-examined on that evidence by counsel. In summary, both Mr and Mrs Hibbitt accepted that they had given an undertaking to the deceased to look after her cats after her death. It was suggested to them that in the discussion with the deceased, this undertaking was linked to the bequest of the deceased's Tennyson Point property, but both of them denied any such linkage.

Construction of will

The first question for determination is whether the language of clause 21(b) clearly makes the gift to the Hibbitts deferred and conditional in the way in which counsel for the defendant suggested. If so, evidence of the deceased's intention is not admissible for the purposes of s 32.
I am of the view that the language of clause 21(b) does not unambiguously make the gift deferred and conditional. Two features of that interpretation are relevant.
The first feature is that the gift would not take effect until the death of the survivor of the two cats. Necessarily this would mean that, for the lifetime of the two cats, the final destination of the property would be unknown, the administration could not be completed and the executor would have to continue to hold the property.
This is not on any view spelt out in the language of clause 21(b). All the clause expressly does is to oblige the executor to "hold" the property "to" the Hibbitts. It appears to have been assumed by the parties that until the death of the cats, the Hibbitts are to have the right to live in the house. But clause 21(b) says nothing express about this either, nor does it address the question of who is to bear the holding costs of the property, such as rates and taxes, in the meantime.
The second feature of the defendant's interpretation of clause 21(b) is that the Hibbitts would not receive the house unless the Hibbitts had complied with their obligation to look after the two cats. Again, I do not think that this is expressly spelt out in the clause. The clause speaks of the bequest being made "in return for caring for the cats." But the will speaks as at the date of the deceased's death. At that point the Hibbitts had already been caring for the cats. The express language of the will was therefore arguably satisfied.
Even if this point is ignored, and one focuses only on care for the cats after the deceased's death, in my view, the phrase is still relevantly ambiguous. It could be read as meaning that the Hibbitts get the house provided that they shall have cared for the cats. But it could equally be read as meaning that the Hibbitts get the house in return for their agreement to look after the cats.
Counsel for Mr Ziade submitted that the gaps in the express wording of the clause which I have identified could readily be filled by implication. Counsel suggested that the better interpretation overall was that the gift was to have a deferred and conditional effect.
At this point in the argument, it is not necessary to express any conclusion on the merits of counsel's contention. The point is that some resort to implication is on any view necessary. It follows in my view that the clause is relevantly ambiguous.
Before proceeding to deal with the s 32 evidence, I propose to consider the question of interpretation, simply by reference to the terms of clause 21(b). I acknowledge counsel's submission that the gaps in the clause could be filled by implication in support of the interpretation for which he contends. But I do not necessarily accept that these are natural implications and involve a natural reading of the language. [2] More importantly, it is a general principle of the construction of wills that the Court will lean in favour of a construction of a gift of property and especially realty which gives rise to an immediate rather than a deferred vesting. [3]
Of course, in the present case, there is a need to wait for some period of time to see whether the clause takes effect. It is quite clear that if there had been insufficient residue assets to make the liabilities of the estate, then to that extent, the gift would have been displaced. But under that interpretation, the vesting is only deferred until the administration of the estate is completed. Whereas under the construction contended for by counsel for Mr Ziade, the vesting is deferred until the second of the cats has died, which could be years after the deceased's death.
It seems to me that the principle of construction to which I have referred, therefore applies in favour of the view advanced on behalf of the Hibbitts and against that advanced by Mr Ziade. This conclusion, I think, is reinforced by practical consequences in the present case. I have already referred to the potentially lengthy deferral of vesting, which would see the executor having to retain the property for a period which might last for years until the second of the cats had died. During that time there could readily be disputes about whether the care being provided was sufficient to qualify for whatever standard of care is implicit in the phrase "caring for" the cats. For instance, there might be a debate about whether moving the cats to another location or boarding them out qualified.
Furthermore, there could be circumstances in which the Hibbitts found themselves unable to comply with the obligation to care for the cats through no fault of their own. What would happen, for instance, if the health of the Hibbitts (who are themselves in their late sixties or early seventies) were to decline such that they were unable to look after the cats?
Counsel for Mr Ziade emphasised that in agreeing to take on the task of caring for the cats, the Hibbitts had effectively agreed to uproot themselves from Western Australia and to live in Sydney until the last of the cats had died. That may be a fair statement of what the deceased contemplated would happen, but the deceased would surely not have contemplated that for more than two years pandemic conditions would make it impossible for the Hibbitts to shuttle back and forth between Sydney and Western Australia as they had presumably intended.
All of these difficulties and uncertainties are avoided if the Court applies the usual rule and leans in favour of an earlier vesting rather than a later one. Indeed, it may well be that the law has adopted that rule of interpretation because such uncertainties and difficulties are apt to arise in most, if not all, of the domestic agreements which call for issues of this type to be determined.
I conclude that on the wording of the will alone, the Hibbitts' construction is the preferable one. But in case I am wrong I will briefly address the evidence of intention which was admitted under s 32.
In my view, the most important evidence is what was recorded in the file notes of 12 and 16 September 2019. In each of those notes, the deceased is recorded as stating that she would "have to trust" the Hibbitts. In my view, that makes it clear that the deceased did not contemplate that her executor would have any recourse against the Hibbitts if they failed to comply with their undertaking. She intended an immediate gift.
Counsel for Mr Ziade submitted that, taken as a whole, the file notes were not so clear. Counsel argued that the 16 September file note, in particular, contained an ambiguity. At the same time as indicating that the deceased thought she would have to trust the Hibbitts, she said that the wording of the clause should be left as it was and should not be changed. Counsel also referred to the affidavit evidence of Mr Anthony Ziade to similar effect.
This submission I think attributes to the deceased a determination to preserve the language of the draft which in the circumstances is unlikely. In retrospect, two issues have emerged with the construction of the clause. The first issue is that it is unclear whether the clause provides for a deferred and conditional gift or an immediate one. The second issue which has emerged is the lack of clarity in the language itself. Neither view is clearly stated.
The file note shows that the deceased was asked to clarify her instructions on whether the gift should be conditional or not. But there is no suggestion that Mr Anthony Ziade drew to her attention the lack of clarity in the language itself to achieve a conditional result. Presumably, this lack of clarity did not occur to him at the time.
Counsel's argument, in effect, involves putting responsibility for the precise form of the clause on the deceased. In my view, that is unrealistic. It is true that the deceased had provided the initial draft of the clause and was the author of the phrase "in return for caring for the cats". But the deceased had sent this draft to her solicitor, and it is reasonable to suppose that she would have expected Mr Ziade to ensure that any uncertainties created by the language which she used were corrected, or at least that instructions were sought from her about them.
In my view, there is simply no reason to think that the deceased would have wanted to retain the particular language of the clause if she had appreciated that it contradicted, or arguably contradicted, her intention that the gift was to be an immediate and unconditional one. It is far more likely that the deceased understood that the gift was to be conditional and assumed that the language was equal to the task.
In reaching this conclusion, I have relied principally on Mr Ziade's file note. This is because, without intending any disrespect, I think the notes, being a contemporaneous document, is likely to be more reliable than Mr Ziade's recollection two years after the event and when a dispute has intervened. This is especially so when it is now clear in hindsight that his drafting of clause 21(b) left something to be desired. Counsel for the defendant accepted that I should give primacy to the note over Mr Ziade's affidavit account.
Counsel also referred to the evidence of Ms Thomas and the defendant about their discussions with the deceased. But I think in the circumstances of the present case, this evidence is of limited weight. There is no dispute that the deceased was concerned to ensure that her cats would have a continuing home. It is accepted in the evidence that the Hibbitts gave an undertaking to provide that home to the cats.
The critical question is one of conditionality. On that question, the evidence of witnesses given two years or so after the event, is more than usually fallible. [4] More importantly, the conversations at the hospital took place two months or so before the will was actually executed. In receiving evidence for the purpose of s 32, I am seeking to determine the deceased's intention in formulating her will.
No doubt, evidence of what the deceased said to other people about her plans, is in a general way, admissible. But the critical evidence is what the deceased's intention was when she was actually formulating the contents of her will. I have discussed that evidence and, in my view, if it were necessary to have recourse to it, it strongly supports the conclusion that I have reached as a matter of construction.
In my view, on its true construction, the gift of the Tennyson Point property to the Hibbitts is subject only to payment and priority of funeral and testamentary expenses of the deceased. The gift, whether of the whole property, or of that part of the property, which is not required to meet those expenses, vests when administration is completed, and those expenses are determined. It is not conditional on the Hibbitts complying with their undertaking to look after the cats, although I have no reason to doubt that the Hibbitts fully intend to comply with that undertaking.

Hibbitt v Ziade

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Cases Cited (3)

Cited By (1)