3726/00 COSIMO MURDOCCA v GUISEPPE MURDOCCA & ANOR
JUDGMENT
1 HIS HONOUR: Ernesto Murdocca died on 29 December 1993. His last will was made on 23 November 1992. It appointed his three sons, Guiseppe, Cosimo and Antonio as executors and trustees. Without intending any disrespect by adopting this course, I propose, in the rest of this judgment, to refer to these three gentlemen by their Christian names.
The Will, and the Windsor Road Property
2 One of the items of property in the deceased's estate, was a parcel of land known as RMB 64 Windsor Road Baulkham Hills. That land had an area of about 1.4 hectares. It was shaped as a thin parallelogram, with the Windsor Road frontage being one of the short sides. Near the Windsor Road frontage a set of buildings stretched across practically the entirety of the width of the block. Moving from south to north, these consisted of a shed, a house which the testator had occupied, a house which Cosimo occupied, and finally a building which consisted of a workroom and store at the rear, and a shop at the front. That shop was used by Cosimo as a retail florist shop. Cosimo's house and the deceased's house were separated from each other by what has been described as a breezeway - an area which was completely roofed, with the side walls of the deceased's house and Cosimo's house forming its sides, and open at the two ends. This breezeway was somewhat more than the width of a motor vehicle in width. There was a substantial area of land behind this row of buildings, part of which was cultivated, and used for the growing of flowers intended for sale.
3 Cosimo had lived on this land since at least 1980. It was in about 1980 that he built his own house there, and also built the florist's shop. He also paid for the extension to the house in which his parents lived.
4 The deceased dealt with this property in Clause 5 of his will as follows:
" I GIVE AND BEQUEATH my property R.M.B. 64 Windsor Road, Baulkham Hills to my sons COSIMO MURDOCCA and ANTONIO MURDOCCA as tenants in common in equal shares for their own use absolutely subject to the following conditions AND I DIRECT that my Trustees shall:-
(a) as far as practical subdivide such property into two (2) parcels of approximately equal area and transfer the parcel on which my home presently occupied by me is erected to my son ANTONIO MURDOCCA for his own use absolutely and the other parcel of land to my son COSIMO MURDOCCA for his own use absolutely.
(b) I DIRECT that my Trustees may for a period of five (5) years after my death postpone the subdivision and transfer referred to in sub-paragraph (a) hereof until such time as it shall be possible to effect the subdivision and shall during that period permit my son COSIMO MURDOCCA to occupy the whole of my said property subject to him paying to my son ANTONIO MURDOCCA a fair market rental for that part of my property as shall comprise my home;
(c) In the event that at the expiration of five (5) years from the date hereof my Trustees shall be unable to obtain planning approval or consent to the subdivision of my property as provided in sub-paragraph (a) hereof THEN I DIRECT that my Trustees shall transfer such property to my son COSIMO MURDOCCA subject to him paying to my son ANTONIO MURDOCCA one half of the value of such property at that date excluding therefrom the value of any improvements erected and paid for by my son COSIMO MURDOCCA on such property;
(d) In the event that my Trustees shall be unable to agree on the value of my said property THEN I DIRECT that my Trustees shall retain and obtain written Valuations from at least three (3) registered Valuers entitled to value properties of the nature of my property to determine the value of the property on the basis as set out in sub-paragraph (d) hereof and the value of such property shall be the average of the valuation of such property by such Valuers."
5 Another piece of real estate in which the deceased had an interest, and which was of somewhat lesser value than RMB 64 Windsor Road, had been given by the will "to my son GUISEPPE MURDOCCA and my daughter GUISEPPINA FRASCA in equal shares as tenants in common for their own use absolutely." These were the only specific devises or legacies made by the will. The rest of the deceased's property was dealt with by a residuary clause, which divided his remaining assets equally amongst his five children.
6 It is now common ground that subdivision of the land was not possible at the date of the deceased's death, and did not become possible within five years from the date of his death.
7 It is also common ground that the opening words of Clause 5(c), "in the event that at the expiration of five (5) years from the date hereof …" should be construed as reading "in the event that at the expiration of five (5) years from the date of my death". (That construction is in accordance with the ambulatory nature of a will, and s 21 Wills Probate and Administration Act 1898; see also Re: Clifford [1912] 1 Ch 29.) It is also agreed that the words in Clause 5(d) "as set out in sub-paragraph (d) hereof" contain a typographical error, and should read "as set out in sub-paragraph (c) hereof".
The Relief Sought in the Proceedings
8 These proceedings are brought by Cosimo Murdocca against his two brothers. They seek performance of Clause 5 of the will, by transfer to Cosimo of the Windsor Road land, or alternatively damages.
9 Three valuations of the land have been obtained. One, from Mr Dupen, values the land at $950,000. Another, by D R Cornish & Associates, values the land at $900,000. A third, from McGees (Mr Bowen), values the land at $1.225 million. Each of these is a valuation as at the end of 1998. The parties have agreed that they can be treated as valuations of the type referred to in Clause 5(d) of the will, if Clause 5(d) requires the valuation to be carried out at the end of 1998. (The agreement is put this way because Antonio submits that the valuation should be carried out at the date of transfer of the land.) Cosimo accepts that, if he is entitled to have the land transferred to him, he is obliged to pay to Antonio one half of the average of these valuations. Half of that average is $512,500.
10 Antonio opposes the granting of that relief. He has two different types of ground upon which he bases that opposition. The first type he submits is that as a matter of construction of the will, Cosimo does not have the entitlement to have the land transferred to him upon payment of the average of the three valuations. The second type of ground he submits is that there was an agreement or arrangement between himself and Cosimo, the effect of which is to prevent Cosimo from now relying on the terms of the will.
11 Some of the legal arguments which Antonio advances, involved contending that some, or all, of paragraphs (a) to (d) inclusive of Clause 5 were void. This raised the prospect that, if they were void, the entire gift in Clause 5 would fail. For that reason Guiseppina Frasca, one of the testator's daughters, was made a defendant to the suit, to represent the interests of the residuary beneficiaries. That daughter filed an appearance, but took no part in the argument in the case.
12 Antonio lodged a cross-claim. In it he seeks damages for breach of the agreement which he says he and Cosimo arrived at concerning the Windsor Road land, and the appointment of trustees for sale of that land, to divide the proceeds equally between himself and Cosimo. At the hearing it was accepted that, if I came to the view that the land was now held between Antonio and Cosimo as tenants in common, I should make a declaration to that effect, and give the parties the opportunity to decide how to deal with the situation thereby created, without immediately incurring the expense of appointment of trustees for sale. It was also submitted, on Cosimo's behalf, that there might be some occasion for Cosimo, in that situation, to claim that he was entitled to a remedy relating to some improvements which he had effected on the land.
Construction of the Will
Precatory Obligations?
13 The first submission which was put was that paragraphs (a) to (d) of Clause 5 were merely precatory, and did not impose any imperative obligations. I do not accept that submission. The whole of paragraphs (a) to (d) are introduced by the words, "AND I DIRECT that my trustees shall", which do not have the flavour of a non-binding request. While it is true that there is some tentativeness in paragraph (a) in that the direction to sub-divide there expressed is stated to arise only "as far as practical" I do not read that as showing that the clauses are merely precatory. When paragraphs (a) to (d) are read as a whole, they recognise that subdivision was not possible at the date of the will, and might not be possible within five years after the testator's death. It was because of this obstacle to the immediate carrying out of a subdivision, that the obligation to sub-divide was expressed to arise only "as far as practical". When paragraphs (a) to (d) are read as a whole, they provide a coherent scheme which recognises the possibility that subdivision might be possible within five years of the testator's death (in which case the property is to be dealt with in one way), and also recognises the possibility that subdivision might not be possible within those five years (in which case the property is dealt with in another way).
14 It is submitted for Antonio that the testator has not made any provision for funds to carry out the directions, and that fact should assist the court to conclude that that direction is not intended to be binding. While it is true that no funds have been provided by the testator for carrying out the directions in Clause 5, there is a rule of law whereby the cost of transferring land specifically devised is not a testamentary expense, but is payable, in the absence of a direction in the will to the contrary, by the specific devisee, rather than by the residuary legatees (Lloyd v Frape (1922) 23 SR (NSW) 11.) Precisely who the specific devisee is, will depend upon how events turn out, about whether subdivision can occur within the five years.
15 Another submission made, was that if the land could not be subdivided within five years, and Cosimo were to fail to make the payment, the land would fall into residue. It was submitted that it was most unlikely that the testator intended that the land would fall into residue, and that I should use this possibility as an aid to reaching the conclusion that paragraphs (a) to (d) were not intended to be binding. While there is a possibility that Cosimo could refuse to accept the transfer of the land, and thereby cause the gift to fail, the effect of Cosimo so doing would be that, instead of receiving half the value of the land, he would receive (in his capacity of a residuary beneficiary) one fifth of the value of the land. The prospect that he would put himself into this situation is one which, it seems to me, should be regarded as so remote that it is not a useful aid to the construction of the will. Once Cosimo had accepted the transfer of the land, he would be under an enforceable obligation to make the appropriate payment for it.
Uncertainty?
16 It is submitted that paragraph (a) is too uncertain to enforce, and that the consequent failure of that condition brings down the whole scheme in paragraphs (a) to (d).
17 In my view, paragraph (a) is not too uncertain to be enforceable. While there might be room for choice about precisely which boundaries the Lots in the subdivision will follow, that is a matter which is left to the discretion of the trustees. When there is a mechanism provided by the will itself, to resolve any uncertainty in paragraph (a), it is not void for uncertainty.
18 Another submission which was put is, that paragraph (a) is void because, at the date of death, it was not possible to subdivide the land. In my view this submission should be rejected. Rather, paragraph (a) is part of an integrated scheme, of the kind I have earlier outlined. It would be wrong to consider paragraph (a) in isolation from the whole of that scheme.
Repugnancy?
19 Another category of legal argument which was put is that, when the first few lines of Clause 5 gave the land to Cosimo and Antonio "as tenants in common in equal shares for their own use absolutely" that was a fully effective gift to them, and the rest of the clause was repugnant to that gift, and therefore void.
20 It is a fundamental rule in will construction that the court should seek to ascertain the intention of the testator, as gathered from the will as a whole. In my view, the submission I am now dealing with would defeat the manifest intention of the testator. While the word "absolutely" in the opening lines of Clause 5 might suggest an unfettered or unlimited gift, even in the nineteenth century the use of such a word in a will was not able to defeat the clear intentions of a testator. In Irvine v Sullivan (1869) 8 Eq 673 the testator gave his residuary estate "to D absolutely, trusting that she will carry out my wishes with regard to the same, with which she is fully acquainted." The court held that the gift was one which the donee took "absolutely, in the sense that she took beneficially, though not, …. absolutely with regard to the entire property, but subject to the wishes expressed to her, and as to which she had bound herself." (at 680).
21 I read the introductory words of Clause 5 as saying that Cosimo and Antonio are initially to obtain a beneficial interest in the land in equal shares, but that their equal shares are absolute only to the extent that they are not affected by the carrying through of the scheme contained in paragraphs (a) to (d). That scheme is one which, however it might be carried out, if carried out properly will result in them receiving property of at least approximately equal value. If subdivision can occur within five years, the equality will be in land value; if subdivision cannot occur within five years, while Cosimo will receive the land in specie, he will have to pay half its value to Antonio. Thus the precise form of the gift which each of the brothers receives is dependant on a contingency. If subdivision is possible within five years, then Antonio will receive half the land; if subdivision is not possible within five years, Antonio will receive money. This does not amount to conferring on Cosimo any option to acquire Antonio's interest (as had been submitted). Rather, the gift to Antonio is subject, firstly, to a condition expressed in paragraph (b), that if subdivision is not possible immediately upon death, then the gift to Antonio does not confer any right of occupancy of the land. Rather, that right of occupancy is conferred on Cosimo, subject to an equitable personal obligation that he pay Antonio a fair market rental. Further, that fair market rental is not a fair market rental for the entirety of the property - it is only for that (comparatively small) part of the property that comprises the testator's home. Secondly, there is a condition of defeasance of the gift to Antonio, namely, that if subdivision is not possible within five years from death, Antonio's rights in specie in the property will cease, Cosimo will become entitled to the whole of the property, but Cosimo will be subject to equitable personal obligation to pay to Antonio one half of the value of the property "at that date" (minus the value of any improvements which Cosimo has erected and paid for on the whole of the property).
22 This view is one which still allows scope for the initial part of the gift to Cosimo and Antonio "as tenants in common in equal shares for their own use absolutely". Those words are ones which govern the situation when none of the conditions in paragraphs (a) to (d) apply. Thus, for example, if the land were to have been resumed shortly after the testator's death, none of the conditions in paragraphs (a) to (d) could be performed, and in that circumstance the money which the resuming authority paid as compensation would be held by Cosimo and Antonio as tenants in common in equal shares.
23 The gift, by the opening few lines of Clause 5, to Cosimo and Antonio as tenants in common is not, it seems to me, the gift of a legal interest. Rather, when Clause 5 is read as whole, it is the trustees who are to hold the Windsor Road property on the trusts set out by Clause 5. It is only if the trustees continue to hold title to the land, that the trustees all be able to subdivide it, as Clause 5(a) contemplates. Likewise, it is only if the trustees hold title to the land that the trustees can exercise the power of postponement of subdivision which Clause 5(b) gives them. Likewise, it is only if the trustees continue to hold the title to the land that the trustees can transfer the property to Cosimo, in the way that Clause 5(c) contemplates.
24 It is of some relevance in construing the will, that the attestation clause shows that the testator was unable to read English fluently, and that the will was read over and translated to him in the Italian language. This fact provides, in my view, an extra reason to place emphasis on the concept or intention underlying the will, rather than decide its construction by minute verbal analysis.
25 In connection with these arguments of construction I was referred to a variety of cases. I have not referred to most of those cases in this judgment because they involve wills, the plan and wording of which is different from this will.
26 In my view, all of the attacks on the validity of paragraphs (a) to (d), or on any of those paragraphs, fail.
The Date of Assessment of Value of the Land, in Paragraph (c)
27 The reader will recall that paragraph (c) requires Cosimo to pay to Antonio one half of the value of the property "at that date". This raised the question, "at what date?". Counsel for Antonio submits that that expression should be construed as referring to the date of transfer. Counsel for Cosimo says that, rather, it should be construed as referring to the date which is the expiration of five years from the date of death. That construction has the benefit that "the expiration of five years from the date hereof" is the only expression identifying a time which is to be found in paragraph (c). A disadvantage of that expression being adopted as providing the meaning for "at that date" is that it is quite some distance away, within paragraph (c), from the expression "at that date".
28 There is no difficulty, as a matter of conveyancing, in the amount which Cosimo is to pay to Antonio being determined as at the date of transfer. It is possible for the trustees to transfer the property to Cosimo, without knowing the amount that Cosimo is then required to pay to Antonio. It is not as though the amount that Cosimo is to pay to Antonio is required to be written in the transfer, in the way that a purchase price is written in the transfer. (See the precedent for a transfer to a devisee in Butterworths Conveyancing Service paragraph [20245].) Rather, by accepting the transfer of the property, Cosimo comes under an equitable personal obligation to pay to Antonio, "one half of the value of such property at that date". There is nothing which requires Cosimo to make the payment at the very moment that the transfer is handed over.
29 However, it is a more strained grammatical construction to treat "at that date" as referring to the date of transfer. This is because, while the word "transfer" occurs much closer, in Clause 5(c) to the expression "at that date" than does "at the expiration of five years from the date hereof", the word "transfer" appears only as a verb, not as a noun.
30 It might be possible to adopt that more strained grammatical constructions if doing so enabled the testator's purposes, as gathered from the will as a whole, to be better achieved. The difference between the two constructions which are advanced is one which will matter only if there is a time gap of any size between the expiration of five years from the date of death, and the date of transfer of the property. There are all sorts of reasons why there might possibly be a time gap between the expiration of five years from the date of death, and the date of the transfer of the property. Some of these might be the fault of one or other of the brothers, some of them might be the fault of someone else, and some of them might be the fault of nobody. If there is a time gap, it seems to me that it is not inconsistent with the scheme of the will that Antonio should receive the value of the land as at five years from the date of death, and if the delay in effecting the transfer is the fault of someone other than himself, he should be able to seek redress from that person. Likewise it is not inconsistent with the scheme of the will that if the delay is his own fault, then he should bear the consequences.
31 In my view, considering how these two alternatives of the constructions of the expression "at that date" work in practice, in the light of the overall objectives of the testator gathered from the will, provides no reason to depart from the more natural grammatical reading of the expression. The correct construction is that "at that date" means "at the expiration of five years from the date of death."
The Alleged Arrangement not to Enforce the Will
32 The grant of probate of the deceased's will was made on 22 March 1994. Antonio gives evidence that following the grant of probate he and his wife Roselina met Cosimo at Cosimo's home. He and Cosimo had not been close and they had, in the past, had many arguments. He says that the following conversation took place between himself and Cosimo:
COSIMO: "I've seen the light and I don't want any bad feelings between us. What's done is done! About the Will, what's yours is yours and what's mine is mine. 50/50 down the middle. I'll wait until a subdivision comes through and then we'll split it or we will share in the profits when we sell it to a developer. What are you going to do with the house?"
ANTONIO: "I really don't know."
COSIMO: "Give it to me. I'll pay you $5,000.00 a year; $2,000.00 in cheque and $3,000.00 in cash and I'll pay all the outgoing costs including all rates."
ANTONIO: "That sounds good to me."
33 Antonio says that at the time it was his view that the current market rental of the property was about $300 per week. Thus, accepting $5,000 per year was, he thought, accepting less than the current market rental.
34 Cosimo gives evidence that he cannot recall that conversation, but he recalls a different conversation soon after the testator's death. That conversation occurred at his house in about late January or early February 1994. His evidence is:
ANTONIO: "We've got to sort out what is going to happen with the land. We should either hold it and develop it ourselves or sell it."
COSIMO: "I want to keep things as simple as we can. We'll go along with the terms of the will, but if rezoning occurs within the time, we'll then have to make a decision on what we do with the land. At this time, I do not want to rush into making any decision. However because of the shop and my business I'm not really interested in selling. If the land is released, then I'd be happy to keep the Windsor Road end because of my business. Otherwise I intend to go along with the terms of the will."
ANTONIO: "Well, that's OK but you know that under the will you have to pay rent."
COSIMO: "I know that but I need to stay because of the business."