Plaintiffs v Defendant

I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal whatsoever and wheresoever situate unto my wife NOLA MORAN provided she shall survive me by thirty days ...

... I GIVE AND DEVISE the real estate owned by me to my son GEOFFREY WILLIAM ARTHUR MORAN

I GIVE AND BEQUEATH the whole of my personal estate to my said brother RONALD MORAN for his own use and benefit subject to payment thereout of all my just debts funeral and testamentary expenses Probate and Federal estate duties ...

3 The deceased was predeceased by his second wife Nola Moran ('Nola') and his son Geoffrey Moran ('Geoffrey'). Geoffrey had two children, Kylie Mamone and Aaron Moran ('the plaintiffs'), who pursuant to s 31 of the Wills Act 1958 (Vic) are entitled to any benefit Geoffrey would have received had he survived the deceased,[1] that is, the gift to Geoffrey under the will of 'the real estate owned by me'.

4 At the time the will was made, the deceased was the registered proprietor of a property at 8 Thorpe Street, Newport ('the Thorpe Street property'). The deceased became the sole registered proprietor of the Thorpe Street property on 24 April 1956. There is no evidence to suggest the deceased ever owned any other real estate.

5 In or around 2005, the deceased developed dementia. On 22 February 2017, the Victorian Civil and Administrative Tribunal ('VCAT') made orders appointing Timothy Mulvany, a solicitor, and Jim McWharton, Nola's brother, as the deceased's co-administrators ('the administration orders'), pursuant to s 43 of the Guardianship and Administration Act 1986 (Vic) ('the Guardianship and Administration Act 1986').

6 In late 2017, the Thorpe Street property was sold for $1,280,000 as a consequence of orders of the Family Court of Australia in a proceeding brought by Nola against the deceased. The relevant effect of those orders was that Nola and the deceased (by his case guardian Timothy Mulvany) were ordered to sell the Thorpe Street property with the net balance to be divided equally between Nola and the deceased. The sale of the Thorpe Street property was effected by the deceased's administrators acting pursuant to their appointment by VCAT.

7 Upon his death, the deceased's personal estate was valued at $687,657.93, comprising a refundable accommodation bond of $500,000, bank accounts totalling $45,150.17, a funeral plan valued at $10,000, and an amount of $132,507.76 held on trust by the solicitors for the estate. The plaintiffs submit that almost all of the deceased's estate represents the balance of the proceeds of sale of the deceased's share in the Thorpe Street property, while the defendant contends that only approximately $630,000 of the estate can be traced to the proceeds of sale. However, both parties agree that a substantial part of the estate can be traced to the proceeds of sale of the Thorpe Street property.

8 By originating motion filed 5 April 2022, the plaintiffs seek declarations to the effect that they are entitled to receive so much of the deceased's estate as represents the deceased's share of the proceeds of sale of the Thorpe Street property, pursuant to s 53 of the Guardianship and Administration Act 1986, alternatively, s 76 of the Guardianship and Administration Act 2019 (Vic) ('the Guardianship and Administration Act 2019').

9 At the time the administration orders were made, s 53 of the Guardianship and Administration Act 1986 relevantly provided:

(1) A represented person and her or his heirs, executors, administrators, next of kin, devisees, legatees and assigns have the same interest in any money or other property arising from or received in respect of any sale, mortgage, exchange, partition or other disposition under the powers given to an administrator by an order of [VCAT] which have not been applied under those powers as she, he or they would have had in the property the subject of the sale, mortgage, exchange, partition or disposition if no sale, mortgage, exchange, partition or disposition had been made.

(5) In this section ... next of kin in relation to a represented person means any person who would be entitled to the property of the represented person or to any share thereof under any law for the distribution of the property of intestates if the represented person had died intestate.

10 Section 76 of the Guardianship and Administration Act 2019 currently provides:

(1) A represented person (irrespective of whether the represented person has testamentary capacity) and a beneficiary of a represented person have the same interest in any money or other property arising from or received in respect of any sale, mortgage, exchange, partition or other disposition under the powers conferred on an administrator by an administration order which have not been applied under those powers that the represented person or beneficiary would have had in the property the subject of the sale, mortgage, exchange, partition or disposition if no sale, mortgage, exchange, partition or disposition had been made.

(5) In this section, beneficiary of a represented person means -

(a) a beneficiary under the will of a represented person; or

(b) a represented person's executor; or

(c) a represented person's administrator under the Administration and Probate Act 1958.

11 The parties both submit that there is no need to determine whether it is the Guardianship and Administration Act 1986 or the Guardianship and Administration Act 2019 (together, 'the Guardianship and Administration Acts') which applies in the present circumstances, as the result will be the same in either case.

12 These provisions operate as statutory exceptions to the common law principle of ademption.[2] As the Court explained in Re Foord:[3]

The word 'ademption' derives 'from the Latin noun ademptio, meaning "a taking away"'.[4] While ademption can arise in a number of circumstances,[5] of relevance here is its application to specific gifts of property by will where at the time of the testator's death the property is no longer her or his to dispose.[6] Subject to certain exceptions, the specific gift fails as there is no property that meets the description of the subject matter of the gift amongst the testator's property at the time of her or his death.[7] An obvious case of ademption is where the testator divests her or himself of the property in her or his lifetime.[8]

The principle [of ademption] only applies to 'specific gifts'.[9] A gift is specific where:

[...] its subject matter is designated as something that does at the time of the will, or shall at the time of the death of the testator, form an identifiable part of his property and is, so to speak, distinguished by the intention of the testator as ascertained from his will to separate it in his disposition from the rest of his property for the purpose of bequeathing it as the distinct subject of a testamentary disposition.[10]

In contrast, a demonstrative gift is an 'unconditional gift of a specified amount accompanied by reference to a particular fund or source for payment thereof'.[11] Gifts that are neither specific nor demonstrative, are described as 'general' - that is, a gift that:

[...] [h]as no reference to the actual state of the testator's property, and it is not a gift of a particular thing or interest identified and set apart from the rest of the testator's property. It is a gift to be satisfied by the executor out of the general assets of the estate without regard to any particular fund, thing or things, and consequently does not require the delivery of any particular thing forming part of the testator's estate or the transfer or any legal or equitable interest of which the testator was possessed to the legatee.[12]

In Re Plowright, Newton J referred to the 'well-established presumption that a legacy should, where possible, be construed as general rather than specific'.[13]

13 The plaintiffs submit that the gift to Geoffrey under the will of 'the real estate owned by me' should be interpreted as a specific gift of the Thorpe Street property and, as such, the statutory exceptions to the principle of ademption will apply. As a result, the plaintiffs submit that the gift to Geoffrey (and by substitution, to the plaintiffs) is saved so that the proceeds of sale of the Thorpe Street property pass to them.

14 On the other hand, the defendant submits that the gift of 'the real estate owned by me' is to be construed as a generic gift applying to all of the deceased's interest in real property as at the date of his death.[14] Accordingly, the statutory exceptions to ademption do not apply to the sale of the Thorpe Street property. As the deceased did not own any real estate at the date of his death, the defendant submits that there is nothing to fulfil the description of 'the real estate owned by me' which Geoffrey would have taken had he survived the deceased.

15 The plaintiffs do not contend that the Guardianship and Administration Acts should be interpreted in such a way as to apply more broadly than as exceptions to the principle of ademption. Accordingly, the question for the Court is whether the gift to Geoffrey is a specific gift of the Thorpe Street property which has been adeemed, or whether it is a general gift of all real estate owned by the deceased at the time of his death.

16 Consideration of whether or not the gift to Geoffrey is a specific gift to which the principle of ademption will apply requires the application of well-established principles of construction of wills.[15]

17 The plaintiffs place particular reliance on the recent decision of the Supreme Court of New South Wales in Catholic Parish of St Brigid Marrickville v Habib ('Habib'),[16] which they submit makes clear that the gift to Geoffrey should be treated as specific. In Habib, Slattery J found that a gift of 'my principal place of residence and all furnishings but subject to any mortgage which may be registered against the said property at the date of my death' was a specific gift of the property owned by the testatrix at the time she made her will. In summary, Slattery J made this conclusion on the basis that:

(a) The use of the word 'my' in the relevant gift implied ownership of the property in question, and the use of 'my' provided a descriptive tie to a particular thing.[17]

(b) Testamentary provisions using the phrase 'my principal place of residence' often do so using the additional words 'at the date of my death'. However, in the clause under consideration, those words qualified 'any mortgage which may be registered' and not 'my principal place of residence'. Further, the words 'the said property' after the conjunction 'but' were a reference back to the same property referred to earlier in the clause.[18]

(c) The surrounding circumstances strongly supported such a construction - not only was the testatrix not contemplating a possible change in her principal place of residence when she made her will, but the circumstances made it likely she held the opposite intention. For instance, the testatrix had a strong connection to the location of the property; the property was of particular value to the devisee given its location; and the testatrix was already showing signs of ill health at the time she made her will, likely making her aware that moving house would be difficult in the future.[19]

(d) The structure of the testatrix's will supported a conclusion that the gift was specific. The gift appeared before the residuary clause and revealed an overall intention of the testatrix to separate from her other property a gift to benefit the devisee, her local church to which she was profoundly attached and which she preferred over her residuary beneficiaries.[20]

18 Relying on Habib, the plaintiffs submit that in the present circumstances the words 'owned by me' indicate that the deceased was intending to refer to a particular thing, namely, the Thorpe Street property. They further submit that it is of significance that the deceased did not use the words 'which I own at the date of my death' in making the gift to Geoffrey. Finally, they submit that the structure of the will reveals an overall intention of the deceased to separate from his other property a gift to benefit his only child.

19 The defendant submits that Habib turns on its own facts and raises no new point of principle. However, the defendant does seek to draw comparisons with the conclusions arrived at in other cases considering differently worded gifts. For example, the defendant submits that the gift to Geoffrey of 'the real estate owned by me' is in terms broadly equivalent to the gift in Re Foord, where a gift of 'all my real estate' in the deceased's will was found to be general such that the principles of ademption did not apply.[21]

20 Ultimately, in the present circumstances there is little to be gleaned from comparisons with constructions arrived at in other cases. The Court's task is to construe the meaning and effect of this particular gift in the circumstances of this particular will. As Taylor J said in McBride v Hudson, '[t]he problem is, of course, one to be resolved by a close consideration of the circumstances of each particular case and of the precise provisions of the will'.[22]

21 The plaintiffs submit that the gift to Geoffrey answers the description of a specific gift because it refers to an identifiable part of the deceased's property which is separated from the rest of his property for the purpose of bequeathing it as the distinct subject of a testamentary disposition. However, such a description does not mean the gift is a specific gift of the Thorpe Street property to which the relevant provisions of the Guardianship and Administration Acts would apply, rather than a gift of any real estate the deceased owned upon his death.

22 In RL v NSW Trustee and Guardian, Campbell JA explained:

Some, but by no means all, judges speak as though there can only be ademption if there is a gift of property that is identified as at the date of the will, and by the time of death the testator or testatrix no longer owns that property. Such judges regard the situation where a will makes a gift of property that is to be identified as at the date of death, but where at the date of death there is no property that matches the description, as operating by a principle separate to ademption. However, in that sort of case the gift still fails.[23]

23 Similarly, in Moylan v Rickard, Peter Lyons J set out the following excerpt from Theobold on Wills:

Strictly speaking the doctrine of ademption is only applicable if the subject matter of the gift is to be ascertained at some time prior to the testator's death. If a specific gift speaks from the testator's death it cannot fail under the doctrine of ademption, but it does nevertheless fail if at his death the testator has no assets which answer to the description in the will.[24]

24 As White J stated in Martin v Martin, '[t]he distinction between specific and general bequests is not always easy to draw'.[25] In the present context, a gift of a class of property which carries with it anything within that description which the deceased had at his death will be generic, in the relevant sense,[26] notwithstanding that it is specific in the sense that its subject matter is designated as something which forms an identifiable part of his property at the time of his death.

25 The plain meaning of the gift of 'the real estate owned by me' would capture any and all real estate owned by the deceased upon his death. It refers to a generic type of property and does not on its face identify any specific properties owned by the deceased at the time he made the will. The fact that the deceased owned only one property at the time the will was made cannot alone support a construction that those words were intended to refer to the Thorpe Street property. The language used suggests an intention to include within the gift any further acquisitions of real property up until the deceased's death.

26 The words employed in the will allow for any changes in the property, real and personal, which the deceased may have owned up until his death. That the language does not suggest a specific gift of the Thorpe Street property is demonstrated by the fact that, had the deceased not retained the Thorpe Street property and, for example, instead sold it shortly after making the will and at some later point purchased other real estate which was retained until his death, there would be no real question that such real estate would be covered by the gift to Geoffrey. Similarly, if the deceased's administrators had invested some portion of the proceeds of sale of the Thorpe Street property in other real estate, such real estate would be covered by the gift to Geoffrey.

27 Nonetheless, the plaintiffs seek to rely on the surrounding circumstances of the will to support a construction that the gift to Geoffrey was intended as a specific gift of the Thorpe Street property. In so submitting, the plaintiffs place particular reliance upon the 'armchair principle' of construction. As was stated in Jepson v Bowman:[27]

This principle allows the court to place itself in the position of the testator at the time of executing the will and take into account all of the circumstances actually known to the testator when the will was made. Referring again to the opening of Lord Romer in Perrin v Morgan:

To understand the language employed the court is entitled, to use [a] familiar expression, to sit in the testator's armchair.[28]

This approach was also succinctly stated by Fullagar J in ANZ Executors & Trustee Co Ltd v McNab:

The search for testamentary intention must be a search for intention disclosed by the words used, and in this search words must prima facie be given their ordinary meanings and, if the law has consistently given a particular meaning to some word or phrase, that is the meaning which the word or phrase must prima facie be given. Nevertheless, the intention is to be gathered from a study of the will as a whole, and in the light of any relevant and admissible evidence of surrounding circumstances.[29]

28 As the plaintiffs acknowledged, not a great deal is known about the deceased. However, they contend that what is known suggests that the gift to Geoffrey was intended to refer specifically to the Thorpe Street property.

29 The deceased was 48 years old when the will was made. There is no evidence of his financial position at the relevant time. That the deceased's death certificate records his usual occupation as fitter and turner is entirely equivocal as to his financial situation and his future intentions at the time he made the will. While the deceased had been the registered proprietor of the Thorpe Street property for 20 years and five months when the will was made, there is no evidence to ground an inference that he intended to retain the Thorpe Street property until his death, or that he had no intention of owning other real estate in the future. For example, and unlike in Habib, there is no evidence that the deceased had health issues which would make moving particularly difficult at the time the will was made, or that the deceased or Geoffrey had a particular connection to the Thorpe Street property or the area in which it is situated.

30 The plaintiffs contend that given the deceased was still living in the Thorpe Street property 40 years after he made the will, it is unlikely he ever contemplated owning any other real estate. However, this fact can have no bearing on the construction of the will. As James LJ stated in Boyes v Cook:

[W]hen it is said that surrounding circumstances may be looked at, that only means that the circumstances existing at the time when the testator made his will may be looked at. You may place yourself, so to speak, in his arm-chair, and consider the circumstances by which he was surrounded when he made his will to assist you in arriving at his intention.[30]

31 The plaintiffs also submit that the structure of the will reveals an overall intention of the deceased to separate from his other property a gift to benefit his only child. However, at best, the structure of the will is equivocal as to whether the gift to Geoffrey is intended to be a specific gift of the Thorpe Street property.

32 As the defendant submits, the will provides for the entirety of the deceased's estate to go to Nola and it is only because Nola predeceased the deceased that the gifts to Geoffrey and Ronald are to take effect. Those gifts effectively divide the estate into real estate and personal estate. If the gift to Geoffrey were a specific gift of the Thorpe Street property, as the plaintiffs contend, then any other real estate that the deceased may have acquired after the will was made would result in a partial intestacy in respect of the property. The potential of such a result supports a conclusion that the gift was intended to be a generic gift of any and all real estate the deceased owned upon his death. However, if the evidence of the surrounding circumstances indicated that the deceased had no intention to acquire other real property during his lifetime, the structure of the will would not itself foreclose a construction of the gift as specific.

33 Ultimately, neither the evidence of the surrounding circumstances nor the structure of the will indicate that the gift to Geoffrey is intended to refer specifically to the Thorpe Street property rather than any real estate owned by the deceased immediately before his death. Accordingly, the gift to Geoffrey cannot be interpreted as a specific gift of the Thorpe Street property. Instead, on its proper construction, the gift of 'all the real estate owned by me' under the will is a gift of any and all real estate owned by the deceased upon his death.

34 Notwithstanding the plain meaning of the gift to Geoffrey, the plaintiffs maintain that construing the gift as general would defeat the clear intention of the deceased, which they submit is the very evil that the relevant provisions of the Guardianship and Administration Acts were designed to avoid. However, as the defendant submits, given how little is known about the deceased, the best guide to the deceased's overall intention is the words used in the will.

35 It may be that at the time he made the will, the deceased made the gift to Geoffrey, his only son, in the belief that any real estate owned by him at his death would form the bulk of his estate. However, as Lord Romer explained in Perrin v Morgan, while it is a cardinal rule of construction that a will should be construed so as to give effect to the intention of the testator, gathered from the language of the will read in light of the circumstances in which it was made, 'the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said'.[31]

36 Given the words used in the will and the lack of evidence in relation to the deceased, such an inference cannot be made. The deceased was only 48 years old when he made the will and there is no evidence of the state of his health or his financial position at that time. The surrounding circumstances do not evince that the deceased intended to specifically bequeath the Thorpe Street property to Geoffrey, rather than making a gift of any real estate he may have owned upon his death.

37 In any event, the plaintiffs did not contend that the relevant provisions of the Guardianship and Administration Acts could apply even if the gift to Geoffrey was not a specific gift of the Thorpe Street property. Nor was it contended, for example, that the principles discussed by Hargrave J in Simpson v Cunning could be extended to the present circumstances,[32] or that the general gift of 'all the real estate owned by me' would have been intended by the deceased to include his refundable accommodation bond.

38 As Windeyer J explained in Pohlner v Pfeiffer, '[a] gift that is generic will carry anything that the testator had at his death which answers to the description.'[33] On its proper construction, the gift to Geoffrey is generic in the relevant sense, as it carries any and all real estate owned by the deceased upon his death. As such, the gift was not adeemed by the sale of the Thorpe Street property and the relevant provisions of the Guardianship and Administration Acts do not apply to the proceeds of sale of the Thorpe Street property.

(a) Pursuant to r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2015, leave be granted to the plaintiffs to amend the originating motion filed 5 April 2022 nunc pro tunc to replace the words 'section 45 of the Wills Act 1997' in paras 1 and 2 of the declarations sought with the words 'section 31 of the Wills Act 1958', and the requirement to file an amended originating motion be dispensed with;

(b) The plaintiffs' originating motion be dismissed;

(c) If the parties are unable to agree on the costs of the proceeding, written submissions are to be filed on or before 25 January 2022.

[1] The plaintiffs' originating motion filed 5 April 2022 referred to s 45 of the Wills Act 1997 (Vic). However, in light of the date at which the will was made, leave will be granted to the plaintiffs pursuant to r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) to amend the originating motion nunc pro tunc to replace the words 'section 45 of the Wills Act 1997' with the words 'section 31 of the Wills Act 1958'.

[2] Simpson v Cunning [2011] VSC 466, [42] (Hargrave J). See also Re Foord [2019] VSC 444.

[3] [2019] VSC 444, [16] (McMillan J) (original citations included).

[4] Reynolds v Bonnici [2017] NSWSC 828, [38] (Lindsay J).

[5] See, eg, ibid [34]-[39] (Lindsay J).

[6] Brown v Heffer [1967] HCA 40; (1967) 116 CLR 344, 348 (Barwick CJ, McTiernan, Kitto and Owen JJ).

[7] RL v NSW Trustee and Guardian [2012] NSWCA 39; (2012) 84 NSWLR 263, 292-3 (Campbell JA). The exceptions include fraud or tortious acts unknown to the testator because of an unauthorised act of an agent, see Simpson v Cunning (n 2) [22] (Hargrave J), or statutory provisions such as Powers of Attorney Act 2014 (Vic) s 83A.

[8] Brown v Heffer (n 6) 348 (Barwick CJ, McTiernan, Kitto and Owen JJ).

[9] Robertson v Broadbent (1883) 8 App Cas 812, 815 (Lord Selborne); McBride v Hudson [1962] HCA 5; (1962) 107 CLR 604; RL v NSW Trustee and Guardian (n 7) 292 (Campbell JA).

[10] McBride v Hudson (n 9) 617 (Dixon CJ); see also Robertson v Broadbent (n 9) 815 (Lord Selborne).

[11] Re Culbertson (1966) 59 DLR (2d) 381 (SK QB), 384 (Disbery J) (reversed on appeal but not on this point: Culbertson v Culbertson (1967) 62 DLR (2d) 134 (SK CA)), cited in Suthers v Suthers [2015] QSC 285, [17] (Burns J).

[12] Re Culbertson (n 11) 384 (Disbery J); see also McBride v Hudson (n 9) 617 (Dixon CJ).

[13] [1971] VicRp 13; [1971] VR 128, 132, citing McBride v Hudson (n 9) 617 (Dixon CJ) and Re O'Connor [1948] Ch 628, 632 (Roxburgh J).

[14] Citing NSW Trustee and Guardian v Reid [2021] NSWSC 1053, [50] (Ward CJ in Eq).

[15] See Fell v Fell (1922) 31 CLR 268, 273-6 (Isaacs J).

[16] [2022] NSWSC 1139.

[21] [2019] VSC 444, [29] (McMillan J).

[22] [1962] HCA 5; (1962) 107 CLR 604, 627-8.

[23] [2012] NSWCA 39; (2012) 84 NSWLR 263, 292 [129].

[24] [2010] QSC 327, [38], quoting John G Ross Martyn et al, Theobold on Wills (16th ed, Sweet and Maxwell, 2001) [21-01].

[25] [2010] NSWSC 700, [40].

[26] Pohlner v Pfeiffer [1964] HCA 8; (1964) 112 CLR 52, 77-9 (Windeyer J). See also NSW Trustee and Guardian v Reid (n 14) [51]-[53] (Ward CJ in Eq).

[27] [2014] VSC 590, [8]-[9] (McMillan J) (original citations included).

[28] [1943] AC 399, 420.

[29] [1999] 3 VR 666, 667 [5].

[30] [1880] UKLawRpCh 76; (1880) 14 Ch D 53, 56.

[31] [1943] AC 399, 420.

[32] Simpson v Cunning (n 2) [42]; cf RL v NSW Trustee and Guardian (n 7) 306 [187] (Campbell JA).

[33] [1964] HCA 8; (1964) 112 CLR 52, 79.