Plaintiff v Defendant

Supreme Court of Victoria|2006-11-03|Before: Kaye J

WILLS - Ademption - Whether devise of property adeemed by a sale by attorney - Testatrix incapacitated and ignorant of sale - Gift held not to be adeemed - Re Viertel [1996] QSC 66; [1997] 1 Qd R 110 followed.

1 The defendant is the executor of the Will of Joan Patricia Waterton, who died on 2 March 2006. The plaintiff is the daughter of Mrs Waterton. By clause 3(b)(iii) of her Will dated 21 November 1990 the deceased gave her residential unit at 4/258 Williams Road, Toorak, which she owned at the date of the Will, to the plaintiff. By paragraph 4 of her Will the deceased directed that the residue of her estate be held on trust to pay the income to the plaintiff for her life and after her death to distribute the capital amongst her children who survive her.

"Speaking for myself, although it may not be absolutely necessary for the decision, I think it has been [adeemed]. There was a time when the courts held that ademption was dependent on the testator's intention, on a presumed intention on his part; and it was therefore held in old days that when a change was effected by public authority, or without the will of the testator, ademption did not follow. But for many years that has ceased to be the law, and I think it is now the law that where a change has occurred in the nature of the property, even though effected by virtue of an Act of Parliament, ademption will follow unless the case can be brought within what I call the principle of Oakes v Oakes. ... "

5 In recent times courts of first instance have recognised a wider exception to the rule than that expressed by Cozens-Hardy MR. The question is whether an exception to the rule exists in order to prevent the doctrine of ademption applying in this case.

6 There is limited authority on this point. The matter has come before me in the Practice Court. There is no adverse party. Strictly speaking it would be better for the decision to be made by a judge in the Causes List, or by a higher court. However the amount involved, and the practical circumstances of the case, make it desirable that I determine the question if possible. On the face of her affidavit the plaintiff has an arguable claim under Part IV of the Administration and Probate Act, should she fail in the application which is before me. It is undesirable that the assets of the estate be squandered in litigation, and that the administration of the estate be unduly delayed, if that can be avoided. Thus, albeit with hesitation, I proceed to decide the matter which has been put before me.

7 In Re Viertel[3] Thomas J of the Supreme Court of Queensland, held that there did exist a wider exception to the doctrine of ademption in circumstances similar to the case before me. Thomas J based his decision on the judgment of Stuart VC in Jenkins v Jones.[4] In that case the testator, a farmer, bequeathed to his son all his farming stock "which shall be in my possession at my decease". Subsequently he became mentally incapacitated and was unable to manage his own affairs. Consequently the testator's wife and the son sold the farming stock, and deposited the proceeds in a bank account where it remained until after the death of the testator. It was then paid to a separate account of the son. The plaintiffs, next of kin of the deceased, brought proceedings against the son seeking to charge him with the amount received by him. Stuart VC dismissed the claim of the plaintiffs. His Lordship commenced by stating the usual principle that if there is a specific legacy of a chattel or of anything else, and if at the time of the testator's death, that thing cannot be found, then the subject matter of the bequest having been extinguished, the gift cannot take effect.[5] His Lordship then stated:

"But quite another consideration arises, where, after the testator has given a specific thing, and without his knowledge, perhaps against his wishes, or tortiously, another person has sold it or has done enough to alter its character."[6]

"The farming stock ceased to exist, but the money was placed in a bank and there remained, and it clearly represented the value of the subject matter of the bequest. The person who changed the character of the chattels was the legatee, to whom and for whose benefit they had been specifically bequeathed. ... I think that as it was by no act of the testator that the chattels were converted, for he never intended any conversion, but intended that the specific legatee should have his farming stock, I ought to refuse the motion ... . The intention of the testator in this case is clear. The conversion of the stock was inevitable, and I cannot hold that the specific legatee's claim to the proceeds ought to be rejected."[7]

9 In Re Viertel (above) the testatrix devised her house to Mr and Mrs McCallum. In 1987 the testatrix was admitted to a home. In 1991 she appointed Mr and Mrs McCallum to be her attorneys under an enduring power of attorney. Pursuant to that power they sold the property, and invested the net proceeds of the sale in the name of the deceased in debenture stock. At the time of the testatrix's death, her estate held that stock. By the time of the sale of the real estate, the testatrix's mental capacity was such that she was incapable of managing her own affairs. Thomas J observed:

"The sale of the house was therefore a bona fide action of the devisee-attorneys to realise and preserve the proceeds of an asset that was no longer required, and in ignorance of the devise to themselves or the adverse effect that a disposition of the asset might otherwise have upon that devise. It was certainly not a disposition of an asset by the testatrix or even a disposition of which she was aware, and was probably one of which she would have disapproved."[8]

10 Thomas J then considered the decision of the Vice Chancellor in Jenkins v Jones, and examined in some detail a number of authorities, including Canadian and American cases on the subject. His Honour concluded:

"With some hesitation I express the view that the rule recognised by Stuart VC in Jenkins v Jones above is an historical exception to the consequence of ademption and that the present circumstances fall within that exception. That case is not referred to in Re Slater, where a very wide statement of the law concerning ademption was formulated ... However I can see no reason why Jenkins v Jones should be regarded as having been overruled, and in principle I regard it as expressing a reasonable exception which ought to be followed."[9]

11 Accordingly, Thomas J held that Mr and Mrs McCallum's entitlement under the Will was not lost by the application of the doctrine of ademption.

12 Re Viertel was followed by Parker J of the Supreme Court of Western Australia in In the Matter of the affairs of Hartigan; ex parte the Public Trustee.[10] In that case the Public Trustee sought directions on the administration of the affairs of the estate of a Miss Elizabeth Hartigan. Miss Hartigan was a lady of mature years who was disabled, by virtue of her mental condition, from managing her own affairs. She was the registered proprietor of real estate at Nedlands. In 1994 she had executed a Will, by which she made express provision for the sale of that property, and for the distribution of the proceeds of that sale to a number of named beneficiaries. Apart from the real estate Miss Hartigan had few other assets. The Public Trustee desired to sell the real estate in order to facilitate the payment of nursing home fees and other expenses on behalf of Miss Hartigan. However the Public Trustee was concerned as to the possible consequences of such a sale, and accordingly asked for the opinion of the Court whether the sale would adeem the devise of the property under the Will. After considering the relevant authorities including Re Slater, and Re Viertel, Parker J expressed the opinion that the sale of the property would not adeem the devise of it under clause 14 of the document. His Honour stated:

"I have, with respect, found the analysis of the position and reasoning of Thomas J helpful and persuasive. The heart of that reasoning turns on the sale of property by a person other than the testator at a time when the testator is incapable of selling the property or of altering an existing will to give effect to the testator's intentions and the changed circumstances. If that is correct it ought not to be a material distinction whether or not the person effecting the sale knew of the terms of the will."[11]

13 There are two other cases to which I should make short reference. The first is Johnston v Maclarn.[12] In that case the plaintiff applied for leave to amend his statement of claim. The defendant submitted that the amendment should not be allowed as the claim was demurrable. The plaintiff claimed that under her Will the late Catherine Maclarn made a bequest to him of certain shares and units in a management trust. Before her death, the deceased's son, under a Power-of-Attorney, sold those shares and units. The plaintiff claimed that the sale of the shares and units did not adeem the bequest to him. Young CJ (In Equity) referred, inter alia, to Jenkins v Jones and Re Viertel. His Honour observed that although it was somewhat difficult to reconcile those cases with the principles enunciated in Re Slater, nonetheless they "remain good law".[13] Accordingly his Honour held that the cause of action pleaded in the statement of claim was sufficiently arguable for it to go to trial.

14 The second case to which I should refer is the decision of Nicholas J in Orr v Renee Slender Estate of the late Godfrey Raymond Orr and others.[14] In that case the testator bequeathed the unit in which he resided to five main beneficiaries. Subsequently the testator developed dementia and the plaintiff, to whom the testator had executed a general Power-of-Attorney, obtained accommodation for her. In order to pay the accommodation bond it was necessary for the plaintiff to sell the unit. The proceeds of the unit were used to pay the accommodation bond, and the balance was deposited into an investment account. The plaintiff was the residuary beneficiary of the Will. After the testator died, the question which arose was whether the specific bequest of the unit had been adeemed by the sale of it. It was submitted that the gift was not adeemed because the plaintiff had acted beyond his authority in selling the unit. Nicholas J rejected that submission, and accordingly held that there was an ademption of the specific legacies in relation to the unit. In reaching that conclusion Nicholas J did make passing reference to Jenkins v Jones, but his Honour did not specifically refer to Re Viertel or Re Hartigan. In my view nothing said by Nicholas J in that case disturbs the persuasive authority of those two decisions.

15 In the present case, the unit was sold by the plaintiff at a time when the testatrix was incapable of selling the property, or of altering her will to give effect to her intentions and her changed circumstances. The testatrix was unaware, and indeed was incapable of being aware, of the sale. Those circumstances bring the case within the ambit of the principles stated in Re Viertel and in Re Hartigan. I am persuaded by the reasoning adopted in both cases that the principles there expressed are sound and should apply to this case. Accordingly, I am prepared to make the two declarations sought in the originating motion and the summons, namely:

1. A declaration that the gift to the plaintiff pursuant to clause 3(b)(iii) of the Will of the deceased dated 21 November 2006 was not adeemed by the sale by the plaintiff as attorney under power of the deceased's unit situate at and known as 4/258 Williams Road, Toorak.

2. A declaration that the plaintiff is entitled to receive pursuant to the Will of the deceased dated 21 November 2006 the balance of moneys representing the proceeds of sale of the deceased's unit situate at and known as 4/259 Williams Road, Toorak.

[1] [1907] 1 Ch 665.

[2] At 671.

[3] [1996] QSC 66; [1997] 1 Qd R 110.

[4] (1866) LR 2 Eq 323.

[5] At 327.

[6] At 328.

[7] At 329.

[8] At 111.

[9] At 115-6.

[10] Unreported, 9 December 1997, BC 97097385.

[11] Ibid, at 10.

[12] [2002] NSWSC 97.

[13] At [19].

[14] [2005] NSWSC 1175.

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Judgment (16 paragraphs)

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