[2014] HCA 7
Milillo v Konnecke (2009) 2 ASTLR 235[2009] NSWCA 109
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 245 CLR 104[2015] HCA 37
Toll (FGCT) Pty Ltd v Alphapham Pty Ltd (2004) 219 CLR 165
Judgment (6 paragraphs)
[1]
The Proceedings
On 6 April 2021 the Court made final orders as a result of a settlement reached between the parties. On that day the matter was listed for hearing.
The orders made had the effect of granting the plaintiff additional provision pursuant to the Succession Act 2006 (NSW) ("Succession Act").
A dispute has now arisen as to the proper construction of order 2 of the orders made.
Order 2 in is the following terms:
In addition to the provision received by the plaintiff in clause 3(a) of the Will of Milan Rapaich dated 10 April 2007, the plaintiff receive from the proceeds of sale of the estate realty the benefit of a sum not exceeding $550,000 (which sum shall become available upon the completion of the sale of the estate realty) with the defendant to purchase or otherwise provide and hold for the plaintiff's use and occupation from time to time, the right to have provided to or for her by a church, government, or other reputable or private institution or organisation providing the same for elder, retired, sick or incapacitated persons, accommodation with or without health care, hospitalisation and nursing or one or more of such services or like services for her lifetime at a net cost of no more than $550,000 with the said sum (or the net proceeds thereof) forming part of the deceased's residuary estate upon the plaintiff's death, such residuary estate to be dealt with pursuant to clause 4 of the Will of the deceased.
Rapaich v Rapaich [2021] NSWSC 992 | Case summary | Zoe
The dispute has arisen as to whether the words the "sum not exceeding $550,000" is to be paid to or for the benefit of the plaintiff in respect of services other than accommodation provided to her by the institutions in which she lives and as a lump sum rather than a capped amount.
The question in my view that arises is one of construction.
In the alternative although the plaintiff did not file a motion (and the court did not insist on one) she seeks to invoke the court's jurisdiction under ss.65 and 66 of the Succession Act.
Both plaintiff and defendant have filed affidavit evidence on the issues.
[2]
Background to the dispute
The plaintiff is the wife of Milan Rapaich who died on 26 May 2021. They were married 38 years.
A former spouse of Milan predeceased him in 1968. Between them they had three surviving children. A fourth, a boy died during childbirth as did his mother, Milan's former spouse.
In his last will dated 7 April 2007, Milan gave the plaintiff the right to reside at their residence at Mona Vale subject to her paying expenses. At the end of the residency the property was to be sold, legacies of $50,000 to be paid to the plaintiff and two of the daughters and then the residue divided amongst the daughters and grandchildren.
Since the deceased died the plaintiff has resided in aged care at St Simeon Village and Health Care at Plumpton.
The plaintiff has received the legacy of $50,000, however the defendant says as only $490,000 is required to secure the accommodation at St Simeon that is all the estate is required to pay under order 2.
The plaintiff submits that the additional amount of $60,000 is both payable pursuant to the agreement and needed for nursing and health care which is integral to the accommodation and also for items such as new dentures.
The defendant on the other hand says that the capped amount was only to be paid for the accommodation bond and nothing else.
The Court was not privy to the negotiations between the parties but by reason of exchanges on the transcript the genesis and or inspiration for the settlement was the unreported decision of Holland J in Crisp v Burns Philp Trustee Co Ltd (NSWSC, 18 December 1979, unreported) ("Crisp").
[3]
The legal principles
The principles dealing with construction which are applicable in my view here are not in doubt. They have been stated and restated in number of decisions of the High Court, examples are as follows; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 245 CLR 104; [2015] HCA 37, Toll (FGCT) Pty Ltd v Alphapham Pty Ltd (2004) 219 CLR 165; [2004] HCA 52.
In short the rights and liabilities of parties under contracts are determined objectively by reference to the contract's text, context and purpose. Particular emphasis is to be placed therefore on the actual language used, the surrounding circumstances known to the parties and the purpose and objects to be secured by the contract.
A detection of what is often called a common intention is a reference to what is to be understood by what a reasonable person would understand by the language of the contract.
As I have already said the backdrop for the agreement was the decision in Crisp referred to above.
In Milillo v Konnecke (2009) 2 ASTLR 235; [2009] NSWCA 109, the Court of Appeal said at [47]-[48] per Ipp JA :
[47] A Crisp order is an order of the kind made by Holland J in Crisp v Burns Philp Trustee Company Ltd (NSWSC, 18 December 1979, unreported). Generally speaking such an order gives a plaintiff an interest for life in real property or in an interest in the property, with the right to it (should the need arise) for the purposes of securing, for the plaintiff's benefit, more appropriate accommodation. In Court v Hunt (NSWSC, 14 September 1987, unreported) Young J (as he then was) said that a Crisp order was intended to provide flexibility, by way of a life estate, the terms of which could be changed to "cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital".
[48] Thus, for example, a Crisp order may entitle a plaintiff, from time to time, to require the executor of a will to sell a home devised by the will, or otherwise owned by the estate, and to use the proceeds for purposes that may include purchasing another home for the plaintiff's use and occupation, or providing accommodation for the plaintiff in a retirement village or similar institution, or in like accommodation providing hospitalisation and nursing care. The flexibility provided by such an order underlies the notion that a Crisp order confers a "portable life interest".
[4]
The Evidence
The plaintiff relies upon two affidavits of her solicitor Mr Jovan Sarai dated 5 and 23 July 2021. The defendant also relies upon two affidavits of her solicitor Ms Karina Penfold dated 5 July and 2 August 2021.
[5]
Consideration
Apart from the Crisp decision the parties also knew that the plaintiff had some savings, and she also was to get the $50,000 legacy upon the sale of the property. That has occurred and that money has been paid.
The notion of a Crisp order as the authorities make clear is to give a plaintiff a life interest in real property or an interest in property with the right to it for the purpose of securing appropriate accommodation. It has been said to confer a "portable life interest".
But that said the content of any agreement is to be dictated in the end by its terms.
The following in my view is clear from the terms of the order. First, the proceeds for sale in relation to which the plaintiff was to receive "benefit", was to be a sum, "not exceeding $550,000". In other words apart from the payment of the legacy there was a cap on the amount to be available for the benefit of the plaintiff.
That amount however was to be "provided" on the basis that it would go towards accommodation which may or may not include health care. It may also be provided it seems to me for hospitalisation and "one or more of such services or like services for her lifetime". But again the clause makes clear that service or those services along with the accommodation would be capped at $550,000.
If the capped amount was purely for accommodation and nothing else a form of words could so easily have been devised. If the health care expenses were to be excluded again that could have been easily achieved in the drafting.
The words "to purchase or otherwise provide and hold for the plaintiff's use and occupation" seem arguably to me to go beyond mere accommodation. She has available for her "use" a capped amount of $550,000 which might only be for accommodation but may also be used if she needs provision for it expenses for "health care, hospitalisation and nursing or one or more of such services".
The phrase "with or without" in my view connotes that they may or may not be necessary but if they are then together with the accommodation expense there will only be the difference between the accommodation bond and the $550,000. There may be no surplus because of the amount of the bond. In other words although the primary purpose is for accommodation she has a package of no more than $550,000 provided for her "use" for her accommodation and health care.
It seems to me that if the clause (which I consider has some ambiguity about it) was to be limited to accommodation only, it could and should have said so. Why else mention health care, hospitalisation, and nursing or "one or more of such services or like services" if they were of no relevance. Or why not simply make it express provision that all such services were to be excluded from the capped amount. The clause does not do that. I am therefore of the view that the amount of $550,000 and no more was to be provided for accommodation and any other expenses that fall within the description of "health care,..." etc.
It follows that if the $490,000 has been used for the accommodation and as the balance is needed for those health care costs the defendant has an obligation to provide it.
So far as the plaintiff makes a claim for further relief I am of the view whilst it is unnecessary to consider the point I should say I do not consider the plaintiff is now entitled belatedly to make such a claim.
This is not a matter for example for the slip rule. It is akin to an application for a re-opening of the case. The mere argument about hardship does not overcome the other considerable difficulties in now entertaining such an application. Were I against the plaintiff on the construction issue I would not have permitted this argument to be put as a matter of discretion.
It is agreed that the defendant should pay the plaintiff's costs of the motion, as agreed or assessed.
[6]
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Decision last updated: 09 August 2021