Reynolds v Bonnici

FACTUAL CONTEXT

1. The de facto relationship commenced in August 2007 and came to an end well before the death of the deceased. The defendant contends that it came to an end in September 2010, at which time the parties argued and, at least temporarily, separated. The plaintiff contends that the relationship did not come to an end until about July 2011, after she had moved out of the family home at Church Point in December 2010 and, having attempted a reconciliation through counselling, the plaintiff and the deceased agreed that their relationship was then at an end. The plaintiff says, and I accept, that she and the deceased remained intimate, albeit less frequently, for a time after December 2010.
2. If (which I doubt) anything turns upon a finding as to when the relationship "came to an end", I prefer the plaintiff's contention as the better reflection of the facts.
3. As late as 3 December 2012 she and the deceased attended a mediation which concentrated on parenting issues and ended before any discussion of a "financial agreement" could be addressed. The deceased appears never to have faced up to a need for there to be a formal property settlement as a mark of termination of the relationship. Evidence on both sides of the record suggests that there was a sharp decline in his mental health in the last few years of his life, which might have reinforced indecision.
4. Three children were born to the deceased: a daughter (aged 24 years at the time of the deceased's death), who is the defendant in these proceedings, and a son (aged 21 years at that time) by a previous relationship; and a daughter (born in April 2008) by the plaintiff.
5. The parties' dispute about the existence or otherwise of an ademption is part only of a larger dispute which might be characterised as one between the deceased's first and second families.

THE QUESTIONS FOR DETERMINATION

1. With the benefit of orders made by me, reluctantly but on their joint application, on 24 October 2016 (and varied on 11 November 2016), pursuant to rule 2.82 of the Uniform Civil Procedure Rules 2005 NSW, the parties agreed to have "the ademption questions" made the subject of a separate determination.
2. Those questions were defined by reference to orders made by the Registrar, by consent, on 18 July 2016. They were embodied in orders 8 and 9 made by the Registrar on that occasion. For convenience, they are here renumbered, with editorial adaptation: (1) Whether the deceased entered into a property settlement agreement with the plaintiff and, if so, what were the terms of that agreement. (2) If the deceased did enter into a property settlement agreement with the plaintiff, whether the property settlement had the effect of adeeming some or all of the bequests devised to the plaintiff.
3. The language of the parties in which these questions have been stated requires the questions themselves to be elaborated in two respects. First, in the use of the expression "property settlement agreement". Secondly, in the use of the expression "bequests devised"
4. The expression "property settlement agreement" must be understood in light of concessions made by the defendant (the proponent of a finding of ademption) that: (a) there is no evidence of any form of written agreement for a "property settlement" signed by the plaintiff and/or the deceased; (b) the defendant's case relies upon the existence of a draft form of written agreement prepared for the deceased by a legally unqualified friend, Todd Page; and (c) that document, if it can be taken as evidence of the terms upon which an agreement was made between the plaintiff and the deceased, did not comply with the requirements of the Family Law Act 1975 Cth for enforcement of a "financial agreement".
5. The parties' use of the expression "bequests devised" manifests a common, contemporary disregard of technical meanings once almost universally attributed to such terminology. Historically, in Anglo-Australian law the word "bequest" signified a testamentary disposition of personalty, and the word "devise" signified a testamentary disposition of real estate: GE Dal Pont and KF Mackie, The Law of Succession (Lexis Nexis Butterworths, Australia, 2013) , paragraph P10.
6. In common with contemporary local practice, the parties have not presented cases that turn on traditional terminological distinctions between a "bequest" and a "devise" or, for that matter, between a "legacy" (once generally confined in meaning to a gift of money or other personal property) and other forms of testamentary disposition.
7. The principal contrast the parties have made is, in substance, between a testamentary disposition of property and one made inter vivos. The focus for attention has been on whether testamentary dispositions for which the deceased's will provides in favour of the plaintiff must be taken to have adeemed because of inter vivos dispositions to which the deceased was a party, with the plaintiff, after the date of his will.
8. The one exception to the parties' liberation from traditional terminology is their use of the expression "portion", an inevitable product of the way the law has been discussed in Australian caselaw as recently as Lake v Quinton [1973] 1 NSWLR 111, as well as English case law built upon the seminal modern judgment of In re Cameron, deceased [1999] Ch 286.
9. The defendant contends that, having obtained a share (portion) of the deceased's estate (property) via the inter vivos financial arrangements he made with her, the plaintiff has no entitlement to obtain a "double portion" of the deceased's estate the will.
10. The word "portion" is, in part, a function of intention; intention informed by purpose. A "portion" is generally spoken of as a gift intended by a will-maker/donor to establish a beneficiary/donee in life or to make substantial provision for him or her: In re Cameron, deceased [1999] Ch 386 at 407.
11. The questions for determination in this judgment turn, ultimately, upon an assessment of the deceased's intention, an assessment implicitly informed by recognition that he had, or might reasonably be thought to have had, a moral obligation (or a purpose) to make provision for the maintenance, and advancement in life, of both the plaintiff and their daughter.
12. To the extent that there may have been an overlap in benefits conferred by the deceased on the plaintiff in his will and in their inter vivos financial arrangements, the defendant contends that there is a "presumption" that the deceased did not intend to give "the same" benefits to the plaintiff twice. Any such presumption is admittedly rebuttable, requiring attention to be given to the particular facts of the case.
13. The ultimate question for the Court is whether, on the evidence, the deceased intended that gifts in favour of the plaintiff in his will should stand notwithstanding financial arrangements into which he and the plaintiff entered subsequently to the making of the will: cf, Parker v Dowling (1916) SR (NSW) 234 at 237.
14. The time at which the existence or otherwise of such an intention must be assessed is the time an inter vivos disposition said to have effected an ademption is made: Lake v Quinton [1973] 1 NSWLR 111 at 121B; In re Cameron, deceased [1999] Ch D 386 at 410; cf, Kirby v Allen (1998) 9 BPR [97734]. That time, in this case, is said by the defendant to fall in or about the period between October-December 2010, contemporaneously with the purchase of a residential property at Mona Vale by the plaintiff and the deceased (as trustees of their self-managed superannuation fund) and the plaintiff's move from the family home at Church Point into that new property (contrary to the law governing management of the fund).

FACTUAL IMPEDIMENTS TO A FINDING OF INTENTION TO ADEEM

1. Impediments to the finding of an intention in the deceased that his inter vivos financial arrangements with the plaintiff supersede his will include the following facts: 1. The deceased did not, at any time, communicate to the plaintiff any such intention. 2. Although (after contracts were exchanged for the purchase of the Mona Vale property) he caused to be prepared a draft form of written agreement which, had it been signed and otherwise dealt with formally, could have bound the plaintiff (as well as himself) to treat their inter vivos financial arrangements as final, he did not effect such an agreement as a pre-condition to, or term of, the financial arrangements in fact made, and he resisted the plaintiff's overtures for a property settlement. 3. The financial arrangements made between the plaintiff and the deceased after the date of the deceased's will were made, by way of a joint investment in the Mona Vale property, for the benefit of the deceased himself, as well as for the benefit of the plaintiff. The plaintiff herself contributed financially to betterment of the parties, both via contributions to the superannuation fund and by regular payments of rent made to the fund during her residence of the Mona Vale property. She was not simply a beneficiary of a gift of property made by the deceased. 4. The financial arrangements made by the plaintiff and the deceased following the date of his will, to the knowledge of both parties, miscarried insofar as they did not comply with Commonwealth legislation (the Superannuation Industry (Supervision) Act 1993) governing the management of a self managed superannuation fund. 5. Presumably aware of the terms of his will, the deceased allowed his will to stand without formal revocation or alteration for 3-4 years after the breakdown of his de facto relationship with the plaintiff.
2. The fact that the deceased's will was not formally revoked or altered in the wake of the inter vivos financial arrangements he made with the plaintiff does not, of itself, impede a finding of ademption. If any testamentary disposition made in favour of the plaintiff in the will adeemed, the will was to that extent inoperative.
3. However, the fact that the will was not formally revoked or altered by the execution of another testamentary instrument is capable of bearing upon a retrospective assessment of the intention of the deceased at the time of his entry into inter vivos financial arrangements with the plaintiff, the time at which testamentary dispositions in favour of the plaintiff are said to have adeemed.
4. The deceased was an intelligent man, but not naturally literate. He had an aversion to lawyers, and a preference for informality, which may, in part, explain his turning away from suggestions that he and the plaintiff enter a formal "financial agreement".
5. According to its terms, the express "aim" of the deceased's draft "agreement" was to "protect" property acquired (nominally by either party but, in the deceased's contemplation, by him) prior to commencement of the parties' de facto relationship. The aim of the "agreement" was not, in terms, to make provision for the plaintiff or their daughter.
6. The terms of the draft "agreement" also suggest that a related aim of the deceased was to forestall any "action" being taken by the plaintiff against his property.
7. The terms of the draft "agreement", coupled with contemporaneous oral statements attributed to the deceased, suggest that a primary motivation of the deceased may have been to induce, or to encourage, the plaintiff to move out of his much cherished Church Point property. If he had any intention to move towards a formal financial agreement with the plaintiff before she moved out of that property, it dissolved after she moved out. He may well have regarded success in having her move out a success sufficient to warrant inaction on the settlement front.
8. Care needs to be taken in the assessment of oral statements attributed to the deceased, a number which suggest that, at various times, he believed he had effected a property settlement with the plaintiff. Evidence of conversations with a deceased person needs to be scrutinised carefully: Plunkett v Bull (1915) 19 CLR 544 at 548-549; Zahra v Francica [2009] NSWSC 1206 at [1]-[2]. The plaintiff's objective of protecting his property, his reluctance to engage with the plaintiff for the purpose of formalising a financial agreement, his maintenance of a joint investment in the Mona Vale property through the parties' self-managed superannuation fund, his antagonism towards the plaintiff as the quality of their personal relationship declined and a contemporaneous deterioration in his mental health all counsel against acceptance of statements made by him as factually correct. The fact that the plaintiff sought, and obtained, a domestic violence order against him provides corroborative evidence of a tendency in the deceased, in his distress, to lash out at the plaintiff.
9. I accept the plaintiff as a witness of truth. I accept her evidence that the deceased did not disclose his draft "agreement" to her or communicate to her any intention that arrangements surrounding the purchase of the Mona Vale property by the parties' superannuation fund were intended by the deceased to operate in lieu of provision he might otherwise make for her (or their infant daughter) by will.
10. Having kept the plaintiff at bay in her request for a formal financial settlement, the deceased remained in control of his own affairs, including his ability to execute a new will, or codicil, should he wish to do so. The fact that he did not do so at any time is a factor that can be taken into account on an assessment of his dispositive intentions generally.

Terminology

1. The questions for determination turn upon the formulation, and operation, of a principle, or principles, variously known as "the equitable doctrine of ademption", "the doctrine of satisfaction of legacies by subsequent gifts (or portions)" and "the presumption (or rule) against double portions". The terminology used to describe the subject is not uncommonly loose.
2. The territory occupied by the subject matter of this judgment, and related topics, is treated in Meagher, Gummow and Lehane's Equity: Doctrine and Remedies (Lexis Nexis Butterworths, Australia, 5th ed, 2015) in chapters 32-33; by Snell's Equity (33rd ed, 2015) in paragraphs [6-057] and [6-068]-[6-086]; by GE Dal Pont and KF Mackie, The Law of Succession (Lexis Nexis Butterworths, Australia, 2013) in paragraphs [7.81]-[7.88]; GL Certoma, The Law of Succession in NSW (Lawbook Co, Australia, 4th ed, 2010), paragraph [11.790]; and by Neville Crago in "Equitable Ademption within the Family" (1987) 17 Western Australian Law Review 272.
3. The equitable "doctrines" of "ademption" and "satisfaction" are not uncommonly the subject of common treatment: Royal North Shore Hospital v Crighton-Smith (1938) 60 CLR 798 at 814. They share similar features. For many purposes, the rules relating to the ademption of portions and the rules relating to the satisfaction of portions are the same; both are fruits of the equitable principle that the law leans against double portions and seeks equality among children of a will-maker: Lake v Quinton [1973] 1 NSWLR 111 at 140B. The present proceedings concern the possibility of an "ademption" of a prospective entitlement under a will, rather than any question about whether a prior obligation of the deceased may be taken to have been "satisfied".
4. The word "ademption", and principles governing an ademption, depend on context.
5. The word "ademption" derives from the Latin noun ademptio, meaning "a taking away". The concept of ademptio was known to the Roman law of succession. In a case analogous to the present proceedings, an inter vivos gift to a legatee, giving to the legatee the value of a thing otherwise to be gifted by will, could operate as a gift in substitution for the legacy: WW Buckland, A Text Book of Roman Law (Cambridge University Press, 3rd ed, 1963), page 346.

Types of Ademption

1. In NSW there are at least four situations in which a valid legacy might "adeem": 1. A gift of specific property prospectively made by a will fails, and is said to have been "adeemed", if (because it has been destroyed or transferred out of the ownership of the will-maker) that property no longer exists in the will-maker at the time, upon his or her death, the will becomes effective: Brown v Heffer (1967) 116 CLR 344 at 348; RL v NSW Trustee and Guardian (2012) 84 NSWLR 263 at 292-293. This is the classic, most commonly encountered form of ademption. 2. When someone such as a parent, with an obligation to provide for another person, makes a will containing a gift to that person, but later in the lifetime of the donor makes a substantial gift to the donee, the gift inter vivos is taken to be a satisfaction pro tanto of the gift prospectively made in the will: RL v NSW Trustee and Guardian (2012) 84 NSWLR 263 at 292[127]. In this situation the testamentary gift is said to have been "adeemed", in whole or part, by the inter vivos gift. Both gifts must be in the nature of a "portion". The operative principle is sometimes spoken of as "the doctrine of the satisfaction of a legacy by a portion" or, more properly, "the ademption of a legacy by a portion": Snell's Equity (33rd ed, 2015), paragraph [6-074]; Meagher, Gummow and Lehane, Equity (5th ed, 2015), paragraphs [33-005]-[33-025]. 3. If a will prospectively provides a gift for a particular purpose and the will-maker subsequently makes an inter vivos gift for the same purpose, the testamentary gift is "adeemed" even though the will-maker does not stand in loco parentis to the beneficiary of the testamentary gift: Meagher Gummow and Lehane, Equity (5th ed, 2015), paragraphs [33-035]-[33-040]. This principle is often spoken of in the same breath as an "ademption of a legacy by a portion", but might more accurately be labelled an "ademption of a legacy given for a particular purpose". 4. An "express ademption" occurs where a will-maker executes a will containing a gift (to be effected when, on the death of the will-maker, the will becomes operative) and subsequently makes an inter vivos gift with the express intention (known to the donee at the time of acceptance of the inter vivos gift) that the inter vivos gift should adeem the testamentary gift pro tanto: Meagher, Gummow and Lehane, Equity (5th ed, 2015), paragraph [33-045]; Nagle v Corrigan (1948) 48 SR (NSW) 252 at 255, citing In re Shields; Corbould-Ellis v Dales [1912] 1 Ch 591.
2. These are not exhaustive illustrations of the operation of the concept of an "ademption", if only because of a need for special consideration of the concept in its application to an incapacitated donor.
3. The first of the four types of ademption is generally treated as distinct from the remaining three. It involves an alteration of the will-maker's estate, property taken away from the estate. The will-maker's intention is irrelevant: Re Morton [1963] VR 40 at 43-44. Its provenance may ultimately be found in the law of probate; but it is overlaid with rules of equity dealing with cases in which a will-maker has not before death completely divested himself, or herself, of the specific property the subject of a testamentary gift: Brown v Heffer (1967) 116 CLR 344 at 348-349; Fairweather v Fairweather (1944) 69 CLR 121; McBride v Hudson (1962) 107 CLR 604; Pohlner v Pfeiffer (1964) 112 CLR 52. A basic characteristic of a specific testamentary disposition is that it fails by ademption if the subject matter of the disposition cannot be found amongst estate assets at the time of the will-maker's death: Certoma, The Law of Succession in New South Wales (4th ed, 2010) , paragraph [11.170]. An ademption will not occur in exceptional cases where, for example, disposal of property is attended by fraud or a want of authority: Johnston v MacLarn [2001] NSWSC 932 at [22]-[24].
4. The intention of the will-maker is critical to the other three types of ademption. They are reflective of: (a) a tendency in equity to lean against "double portions"; and (b) in the context of provision made for children of the will-maker, favour given to the maxim "equality is equity". They share a common denominator in an inconsistency between a testamentary gift and an inter vivos gift, characterised as anticipatory of the testamentary gift, in circumstances in which the will-maker is found to have intended that the donee receive only one gift.
5. Principles governing an ademption arising out of the management of the estate of an incapable person may require separate treatment, including reference to legislation governing management of the estate. Where a will is made by a person with testamentary capacity (Banks v Goodfellow (1870) LR 5 QB 549 at 565) and that person subsequently loses dispositive capacity (Gibbons v Wright (1954) 91 CLR 423 at 437- 438), a subsequent disposition of property by a person authorised (by an enduring power of attorney or by an appointment as a protected estate manager) to deal with his property inter vivos can effect an ademption (Meagher Gummow and Lehane, Equity (5th ed 2015), paragraph [33-030]; In re Cameron, deceased [1999] Ch 386 at 405-406 and 420H), subject to the operation of applicable legislation: RL and NSW Trustee and Guardian (2012) 84 NSWLR 263, citing NSW Trustee and Guardian Act 2009 NSW, sections 82-83 and other provisions; Powers Of Attorney Act 2003 NSW, sections 22-23; Re Gibson [2014] 1 Qd R 553 at 558-560; NSW Law Reform Commission, Report 85 (April 1998), Uniform Succession Laws: The Law Of Wills, chapter 9.2.
6. Care needs to be taken in reading older English case law because variant statements of principle may reflect technicalities of English probate law which have no contemporary or local significance, as is recognised in Public Trustee v Regan (1933) 33 SR (NSW) 361 at 368 and Lake v Quinton [1973] 1 NSWLR 111 at 139-142.

Equitable Principles governing an Intentional Ademption

1. A convenient elaboration of the "doctrine of ademption" can be found in Murray CJ's judgment in In re Everett; Executor Trustee and Agency Company of South Australia Limited v Everett [1917] SALR 52 at 65-66: "Ademption depends on the intention of the donor. In some cases the intention is presumed. In others it must be expressed. In the former it need not have been specifically brought to the notice of the donee; in the latter it is essential that it should have been. An intention to adeem is presumed in only two classes of cases: (1) where a father or person in loco parentis gives a legacy to a child of his own or to a person towards whom he stands in loco parentis , and subsequently makes a gift or advance of substantially the same quality as the legacy to the same child or person during his lifetime; and (2) where a person gives a legacy for a particular purpose and subsequently makes a gift or advance to the legatee for the same purpose. In these cases it is presumed that the donor did not intend that both benefits should be taken, but meant the gift to be in satisfaction of the legacy either wholly or pro tanto according as the amount of the gift is equal to or less than the amount of the legacy. The presumption, however, may be rebutted by evidence shewing that the donor intended both gift and legacy to have effect, and this in its turn may be met by evidence in confirmation of the presumption. Where the circumstances are not such as to raise a presumption, the intention that the gift should be taken in satisfaction of the legacy must, as I have said, have been brought to the knowledge of the donee at the time of the gift, so that in effect the gift is made on the condition that the legacy should not be claimed. The principle is fully discussed by Warrington J in the recent case of In re Shields; Courbould-Ellis v Shields [1912] 1 Ch 591, and an instance of its application will be found in In re Ashton; Ingram v Pappillon [1898] 1 Ch 142."
2. There is an affinity between the two classes of case, explained by Murray CJ, that give rise to an application of the "rule against double portions" and a "presumption of an intention to adeem": (a) the classic case of provision made, by way of a portion, for the maintenance or advancement in life of a child in respect of whom a will-maker has, or has assumed, the obligations of a person in loco parentis; and (b) the case of a will-maker who intends to confer a gift for a particular purpose (which, to emphasise the point, might be a provision for maintenance or advancement in life): Re Sparrow, deceased [1967] VR 739 at 741-742. Both types of case are governed by a purpose of one description or another, express or implied.
3. In these cases the law looks to see if there is such an identity between a gift by will and a subsequent inter vivos disposition to support an inference that the inter vivos gift was made in anticipation, and fulfilment, of the testamentary gift.
4. Contrary to submissions made on behalf of the defendant, the current proceedings do not give rise to any presumption of an intention to adeem. They do not fall into either of the two classes identified by Murray CJ in In re Everett. They involve a species of "express ademption", in which an intention to adeem must be proved and the donee must have knowledge of the donor's intention at the time of acceptance of the inter vivos gift said to effect an ademption.
5. A presumption against double portions is not available otherwise than in the context of a legacy for a child (or a person similarly placed) or for a particular purpose.
6. Where a presumption against double portions is not available, the donor must be proven to have had an intention to adeem, and the donee must have had knowledge of that intention, at the time of the inter vivos gift said to have effected an ademption.
7. These proceedings do not involve a legacy in favour of a child by a father, notwithstanding that the deceased may have intended to favour his youngest child indirectly through the plaintiff. There is no warrant for an extension of the concept of an ademption of a legacy by a portion to dispositions of property made by one spouse, or a partner in a de facto relationship, to another, sui juris.
8. In no material sense can it be said that the current proceedings involve a legacy "for a particular purpose" within the principles governing an ademption of a legacy given for a particular purpose. A minor, explicitly purposive gift to the plaintiff is found in the deceased's will - a gift of furniture - but, during the course of argument, counsel for the defendant, sensibly, disclaimed any challenge to that particular gift. No other testamentary gift in favour of the plaintiff is qualified by a statement of purpose, express or implied. There is no warrant for extending the principles governing an ademption generally to dispositions of property between spouses or de facto partners by a presumptive preparedness to characterise any such disposition as one made for the maintenance or advancement in life of a spouse/partner or of a child of the parties' relationship.
9. On the facts of a particular case, a presumption against double portions might operate as between a married couple or de facto partners; but it would require special circumstances not found in the present proceedings: a child-like dependency of the donee on the donor or a purposive legacy duly particularised.
10. Equity's principles are adaptable to modern times (as both Lake v Quinton [1973] 1 NSWLR 111 at 139-140 and In re Cameron, deceased [1999] Ch D 386 at 416-417, in the context of an ademption, acknowledge); but, in a legislative framework that includes an accommodation of informality in the making of a will (Succession Act 2006 NSW, section 8), broad discretionary powers to adjust property rights within a marriage or de facto relationship (Family Law Act 1975 Cth, sections 78, 79 and 75(2); sections 90SL, 90SM and 90SF) and broad powers to grant family provision relief (Succession Act 2006, Chapter 3), I am not cognisant of any reason of policy, or otherwise, to extend the scope or operation of the law of ademption in a case such as the present one. There is no element of unconscionability in the plaintiff taking the benefit of the deceased's testamentary gifts. Nor is there any reason established by the evidence for a finding that the deceased did not intend those gifts to operate according to their terms.
11. Re Horrocks [1944] NZLR 314, Re Sparrow, deceased [1967] VR 739 and Lake v Quinton [1973] 1 NSWLR 111 illustrate the operation of equitable principles governing an ademption in a case in which a will made by one spouse in favour of another might be thought to have been superseded, in whole or part, by a formal "separation agreement" made for the provision of maintenance, or for a settlement of matrimonial property claims, upon the termination of a marriage.
12. The current proceedings are factually similar, insofar as they concern events surrounding the termination of a de facto relationship, but they differ insofar as there is no formal agreement enforceable as a settlement under the Family Law Act or any comparable legislation. There is here no agreed attribution of finality by the parties to a negotiated arrangement for settlement of maintenance and property claims.

Perceptions of Anomaly in the Character of "Ademption of a Legacy by a Portion"

1. However formulated, the concept of ademption of a legacy by a portion (upon which the defendant relies directly or by analogy) is based, historically, upon a proposition now routinely denied in family provision jurisprudence (currently governed by Chapter 3 of the Succession Act 2006) that a testator (or testatrix) has a moral obligation to make equal provision for the maintenance or advancement in life of his (or her) children (or some other person to whom he or she owes a similar family obligation to make provision).
2. In a modern Australian setting it is, or might be perceived to be, anomalous.
3. An exposition of perceived anomalies serves to explain why caution is required in declining to take up the defendant's implicit invitation that the concept be extended beyond its historical boundaries.
4. The concept of an "ademption of a legacy given for a particular purpose" has such a close affinity with "ademption of a legacy by a portion" that criticism of one might be adaptable as criticism of the other. Both attribute primacy to a working out of a will-maker's intentions untrammelled by the formalities of making a will. It may be that the concept of "ademption of a legacy by a portion" attracts particular criticism because it is based upon a broad, contestable moral imperative that, within a family, children are generally to be treated equally. The concept of "ademption of a legacy given for particular purpose" might also seem more palatable than the related concept because it can more comfortably be fitted within the paradigm of testamentary freedom, with the will-maker's particular purpose more readily discernible on the face of a will.
5. The concept of ademption of a testamentary gift by an inter vivos gift effected subsequent to the making of a will, governed by an intention in the donor (to substitute the inter vivos gift for the proposed testamentary gift) not communicated to the donee at or before the time the inter vivos gift is accepted by the donee, depends for its operation on the character of a will as inherently revocable at any time before the will-maker's death.
6. Recognising a degree of interconnectedness in them, notice may be taken of four perceived anomalies of the concept of "ademption of a legacy by a portion".
7. First, if the donor's intention is not communicated to the donee there may be no reason to suppose that the donee should be conscience-bound to suffer a reduction in any testamentary gift.
8. To the extent (explained in In re Cameron, deceased [1999] Ch D 386 at 410-411) that the concept of ademption of a legacy by a subsequent portion operates without reference to a donee's state of knowledge, or conscience, it is based upon a rule-based social policy adopted by English Chancery judges before enactment of the Wills Act 1837 (UK), which is the historical model for Chapter 2 of the Succession Act (governing formalities attending the execution, and effect, of a will), and well before the introduction of a family provision jurisdiction (in NSW, by the Testator's and Family Maintenance and Guardianship of Infants Act 1916 NSW, now found in Chapter 3 of the Succession Act).
9. Secondly, an informal intention on the part of a donor: (a) that an inter vivos gift effect a "revocation" of a proposed testamentary gift or an "extinguishment" of property that might otherwise be the subject of a testamentary gift; or (b) that it might place the beneficiary of a will under an obligation to account for property received by way of an inter vivos gift (each of which is a different way of conceptualising the ademption of a legacy by a subsequent inter vivos gift) does not sit well with those provisions of the Succession Act which require formalities for the making of a will to be observed (section 6); those which allow for such formalities to be dispensed with, in defined circumstances, upon the making of an "informal will" (section 8); or those which provide that a will takes effect, with respect to property disposed of by the will, as if it had been executed immediately before the death of the will-maker (section 30).
10. Where the rule against double portions applies it is rationalised, vis a vis the formal requirements of will-making, by characterisation of its operation, not as an implied revocation of a will, but as an acceleration of the enjoyment of the provisions of the will: In re Cameron, deceased [1999] Ch D 386 at 417 and 421 D; Lake v Quinton [1973] 1 NSWLR 111 at 122B and 122E.
11. Thirdly, if an inter vivos gift, unattended by any formality, can operate to "modify" the terms of a will (to use a neutral expression) without a timely communication of such an intention to the donee, there is scope for a fraudulent attribution of intention to a testator or testatrix which the law of wills (presently embodied in Chapter 2, Part 2.1, of the Succession Act) has endeavoured to foreclose.
12. Fourthly, a finding of ademption attendant upon the making of an inter vivos gift (effecting a form of revocation, or alteration, of the testamentary gift said to have been adeemed) might reasonably be thought to defeat, rather than to give effect to, a will-maker's testamentary intentions if, despite the making of an inter vivos gift, the will is not formally revoked, or altered, by another testamentary instrument.
13. Having noted a succession of judicial laments about it, Crago proposed (in (1987) 17 Western Australian Law Review at 299-300) a legislative abolition of the principle of ademption by a subsequent portion. He recommended the enactment of a statutory provision in the following form: "No presumption against double portions shall be held to arise upon the administration of the estate of a deceased person by reason solely of a gift of any property by the deceased during his [or her] lifetime to any child of the deceased or to any person to whom the deceased person stood in loco parentis".
14. No such proposal appears to have been taken up, although a similar concept of "hotchpotch" in the administration of an intestate estate has been abolished: Succession Act, section 140; Certoma, The Law of Succession in New South Wales (4th ed, 2010), paragraphs [3.90]; IJ Hardingham, The Law of Intestate Succession in Australia and New Zealand (Law Book Co, Sydney, 1978), paragraph [405] and Chapters 17-18; NSW Law Reform Commission Report 116 (April 2007), Uniform Succession Laws: Intestacy, Chapter 13. Section 140 provides that the distribution of an intestate estate is not affected by gifts made by the intestate to persons entitled: (a) during the intestate's lifetime; or (b) in the case of a partial intestacy, by will.
15. Anomolous though the law governing ademption of a legacy by a subsequent portion may be, it must be taken as found. Its virtue, as well as its vice, is its heavy emphasis on a finding of fact about the intention of a will-maker/donor.

PRECEDENT CASES DISTINGUISHED

1. The two Australian cases particularly relied upon by the defendant in the current proceedings, in support of a finding of ademption by subsequent inter vivos gift, are distinguishable from the facts of the present case. In both of those cases, Lake v Quinton [1973] 1 NSWLR 111 and Re Sparrow [1967] VR 739, the inter vivos gift was governed by an express, written agreement made between the donor (testator) and the donee (a former spouse).
2. The existence of a formal agreement between a donor and donee which post-dates a will made by the donor at least has the virtue of personal engagement with the donee, a degree of formality reminiscent of those attending the execution of a will, and a firm evidentiary foundation for an inquiry whether the parties' agreement is inconsistent with the will.
3. In the current proceedings, although the deceased (the testator, the donor) caused to be prepared a draft form of "property settlement agreement", he did not communicate the terms of any such agreement to the plaintiff (his de facto spouse) before, during or after the breakdown of their relationship; property transactions effected by the parties in adjusting their respective rights upon a breakdown of their relationship do not point unequivocally to the terms of the deceased's uncommunicated, draft "agreement"; and, on any view of the facts, the deceased left his will unrevoked and unaltered for a period of three years following the end of the relationship.
4. I do not accept, as the defendant contends, that the deceased and the plaintiff shared a common, unexpressed, intention that arrangements made by them in the course of their bringing their relationship to an end would operate to disentitle the plaintiff from participation in the deceased's estate as a beneficiary named in the will he made shortly before their relationship broke down. Those arrangements bore the character of an investment effected through a superannuation fund in which the parties each had an interest. They did not take the form of a once and for all settlement on a parting of the ways.
5. Nor do I accept that the deceased, having refrained from pressing upon the plaintiff any need for a formal "property settlement agreement", but (on the contrary) having resisted her requests for such a settlement, unilaterally intended (without notice to the plaintiff) that financial arrangements made between them in the nature of an investment (involving financial contributions by her as well as him) at or about the time of their relationship breakdown would operate as an implied revocation of gifts made in favour of the plaintiff in the unrevoked, unaltered will he left at his death.

THE WILL

1. By his will dated 26 May 2010, the deceased appointed the plaintiff and the defendant as his "executors": Clause 2.
2. The will made provision for the appointment of testamentary guardians for the deceased's youngest daughter should he and the plaintiff not be alive: Clause 3. That provision ties in with a provision (clause 7) for the creation of a testamentary trust in favour of the child if orphaned.
3. Under the heading "Special gifts", the will provided for gifts of various chattels in favour of the deceased's three children individually: Clauses 4(a) -4(b). In clause 4(f) it declared that "my partner [the plaintiff] is the beneficiary of my super." In clause 4(g) it declared that "[my] furniture is to be given directly to [the plaintiff] without any payment required to assist in raising our daughter. "
4. Under the heading "Real estate", by clause 5, subject to a qualification, the will directed that three specified properties be sold and that the proceeds of sale go to the three children and the plaintiff: one property (the former family home) at Church Point, another at Westmead, the third in Queensland. The qualification was that the deceased's father has a right of residence in the Queensland property.
5. The Westmead property was sold by the deceased in 2010. Uncontroversially, the deceased's testamentary gift of the proceeds of sale of that property was the subject of an ademption.
6. By clause 6, the will named the deceased's three children and the plaintiff as his residuary beneficiaries.
7. Clause 8 provided as follows: "If any of my children die after me but before reaching his or her age of inheritance (18 yrs), their portion of the estate will go to the remaining beneficiaries."
8. Neither party to the proceedings attributes particular significance to the use here of the word "portion", which accords with the word "share".
9. Other provisions of the will do not bear upon questions in dispute.

THE ALLEGED "PROPERTY SETTLEMENT AGREEMENT"

1. On 8 October 2010 the deceased, in consultation with his friend Todd Page, caused to be created a short time thereafter a single page, typed document in terms to the following effect (with emphasis added): "This is a de facto agreement between [the deceased] and [the plaintiff] The aim of this agreement is to protect both individuals' property and belongings that was purchased prior to the relationship. Both parties have received independent legal advice prior to this agreement being signed although no certificates of understanding were issued. Both parties will comply with the following conditions. 1. Residential property to be purchased by [the parties' superannuation fund] for approximately $585K for the sole use of [the plaintiff]. 2. Part of the purchase funds will be contributed by [the plaintiff] (140K). This figure is made up of 60K that [the plaintiff] currently holds within [the superannuation fund] and an additional 80K that she will add at the time of purchase. 3. The remaining funds will be made up as follows; 4. 180K that [the deceased] currently has within [the superannuation fund). 5. 112.5K that [the deceased] will add to [the superannuation fund) at time of purchase. 6. [The deceased] will give [the plaintiff) 152.5 that she will add to [the superannuation fund] to aid purchase. 7. Both parties will own a 50% share of [the superannuation fund]. 8. [The superannuation fund] will purchase the property and own it. 9. No action will be taken against either party for property or belongings at any time in the future."
2. No formal agreement in these terms, or an adaptation of them, was ever signed by the plaintiff or the deceased.
3. A copy of the document was never provided to the plaintiff. Nor were its terms, as a property settlement agreement, ever communicated to the plaintiff.
4. It is common ground between the plaintiff and the defendant that, even if a copy of the document had been signed by both parties, it would not have complied with the requirements of section 90UJ of the Family Law Act 1975 Cth, so as to be enforceable under that Act as a "financial agreement", without certificates of independent legal advice from legal practitioners required to provide advice about the effect of the agreement on the rights of the party advised and about the advantages and disadvantages to that party of making the agreement.
5. It is also common ground that, to the extent that the document provided for a residential property to be purchased by the couple's superannuation fund for the sole use of the plaintiff, its terms were unlawful by operation of Australian superannuation law.
6. The defendant concedes that payments made by the deceased to the superannuation fund after creation of the document were made to an extent benefiting the deceased as well as the plaintiff.
7. The defendant contends that the document evidenced an agreement between the deceased and the plaintiff which they both acted upon, resulting in a benefit to the plaintiff of sole use of a property purchased at Mona Vale as her home between 2010-2014, and a marked increase in the value of her membership account in the superannuation fund.
8. She contends that, although the benefits enjoyed by the plaintiff arising from the alleged "agreement" were not exact matches or "like-for-like" with the gifts made for the plaintiff in the deceased's will, they were benefits in the nature of provision for a spouse, and they had the same purpose, with the consequence (she contends) that the arrangements made between the parties inter vivos should be taken to have adeemed gifts made in favour of the plaintiff in the will.
9. She contends that the fact that the plaintiff may not enjoy any superannuation benefits until she reaches a vesting age does not change the fact, she contends, that the benefits provided by the inter vivos "agreement" were provided by the deceased for the purpose of maintenance of the plaintiff (and the plaintiff's daughter).
10. The defendant's case is succinctly put in the following submission: "The Court should find that the gifts to the plaintiff in the will of the deceased have adeemed 'because the intended bounty has already been satisfied by the testator; that is, there is an implied revocation of the gift of the legacy: Re Sparrow, deceased [1967] VR 739 at 741 citing Jarman on Wills, 8th ed, Vol 2, at page 1136. The gifts (the 'intended bounty' have already been satisfied through the deceased agreeing (an agreement which was acted upon) to provide funds so that the trustee of the [superannuation fund] could purchase a property (which was purchased in Mona Vale ) for the sole benefit of the plaintiff. The agreement was made and acted upon at a time when the relationship between the plaintiff and the defendant was coming to an end."
11. The deceased's draft document was prepared shortly after the time when (on 7 October 2010) contracts were exchanged for the purchase of the Mona Vale property, in respect of a purchase which was completed on 30 November 2010.
12. The property was purchased in the names of the plaintiff and the deceased as trustees of their superannuation fund. After the death of the deceased, it was transferred into the name of the second cross defendant.

THE FINANCIAL ARRANGEMENTS MADE INTER VIVOS

1. There is no precise correlation, although there are manifest similarities, between the deceased's draft "agreement" and the financial arrangements made by him and the plaintiff after the date of his will. There is less correlation between the terms of the deceased's will (on the one hand) and (on the other hand) the terms of the parties' post-will financial arrangements, whether or not those arrangements are described by reference to the draft "agreement".
2. As trustees of their superannuation fund, the plaintiff and the deceased purchased the Mona Vale property for $565,000, not the $585,000 referred to in the draft "agreement". This is a relatively small, but curious, difference in price. The draft was prepared after contracts on the Mona Vale purchase had been exchanged.
3. The Mona Vale property was purchased, as a joint investment, following upon discussions between the plaintiff and the deceased throughout 2010, including times antecedent to disharmony in their relationship. The purchase is consistent with an expectation of a continuing relationship or reconciliation, not unequivocally a relationship done and dusted. It cannot be characterised as a purchase made in performance of any agreement identified by reference to the deceased's post-dated draft.
4. The Mona Vale purchase was funded by the parties' superannuation fund (without borrowings), aided by a contribution made by the plaintiff ($176,350) exceeding that ($140,000) contemplated by the draft "agreement", even if it be the fact that the excess can be explained by a contribution made by the deceased to the fund in the name of the plaintiff. The fact remains that, through the superannuation fund, the plaintiff made a sizeable, independent capital contribution to the purchase which enured to the benefit of both parties, subject to rules governing administration of the fund.
5. Although the draft "agreement" contemplated purchase of a property "for the sole use of" the plaintiff (a purpose not consistent with Australian superannuation law), the plaintiff regularly paid rent (not suggested to have been no more than a nominal rent) to the fund during her residency of the Mona Vale property, a fact inconsistent with characterisation of the property as one purchased "for the sole use" of the plaintiff.
6. Purchase of the Mona Vale property on trust for the superannuation fund meant that the property was acquired as an asset of the fund, subject to the terms of the trust deed (and rules embodied in a schedule to the deed), and not as a property within the gift of the deceased simply to alienate in favour of the plaintiff.
7. Although there might, in this respect, be correspondence between the draft "agreement" and the parties' actual investment, the imposition of the superannuation fund between the deceased and the Mona Vale property militates against any correspondence between provision made for the plaintiff in the deceased's will and the parties' subsequent financial arrangements.
8. Although the deceased declares in his will that "my partner [the plaintiff] is the beneficiary of my super", superannuation benefits payable on the death of the deceased do not form part of the deceased's estate.
9. Although that declaration might be supportive of a claim that the plaintiff might make on the trustee of the fund for a discretionary distribution to her, it should not escape attention that the defendant contends that, on the proper construction of the trust deed, the plaintiff is not eligible to be paid any of those benefits because she was not, at the time of the deceased's death, one of his "dependants".
10. The proper construction of the trust deed (more particularly, rule 4.1) remains the subject of contention, but not so the fact that property owned by the trust fund did not form part of the estate of the deceased.

NO "DOUBLE PORTIONS" OR ADEMPTION

1. Upon an assumption (contrary to my findings) that the "rule against double portions" applies in this case, and accepting that the deceased's will provided for the plaintiff to receive a "portion" of his estate, there is not sufficient identity between the provisions of the will and any disposition subsequently made by the deceased in favour of the plaintiff during his lifetime to attract characterisation as a "double portion".
2. No more than a substantial identity is required (Lake v Quinton [1973] 1 NSWLR 111 at 143B-C; In re Cameron, deceased [1999] Ch D 386 at 411), assessing what is or is not "substantial" by reference to the intention of the will-maker/donor. However, in this case, neither a "substantial identity" of dispositions nor the requisite intention for an ademption can be found.
3. I am not satisfied that the deceased ever intended the purchase of the Mona Vale property as a joint investment (and ancillary transactions) to operate as a legal impediment to any entitlement the plaintiff might prospectively have to gifts made in his will. It was always open to him to revoke or alter his will by execution of a testamentary instrument, either in the form of a formal will or by means of an informal will; this he did not do. It was always open to him to seek a formal settlement of the respective property entitlements of the plaintiff and himself via a "financial agreement" governed by the Family Law Act 1975; this also he did not do. Instead, he embraced a joint investment with the plaintiff through the parties' ongoing superannuation fund.
4. In my opinion, there is no foundation in the principles governing an ademption to deny the validity of any of the gifts made in favour of the plaintiff in the will of the deceased.

CONCLUSION

1. The questions stated for the Court's separate determination should be answered as follows: 1. At no time did the deceased enter into a property settlement agreement with the plaintiff. 2. Not applicable.
2. These answers having been recorded, the following orders are made in order to give them effect: 1. DECLARE that the gifts in favour of the plaintiff for which the will of the late David Bonnici dated 26 May 2010 provides have not adeemed. 2. ORDER that the claim for relief made in paragraph 1 of the amended statement of cross-claim filed on 26 October 2016 by the defendant be dismissed.
3. Prima facie, the costs of the proceedings relating to a determination of "the ademption questions" should follow the event with an order that the defendant pay the plaintiff's costs. The plaintiff has also foreshadowed a claim for indemnity costs associated with a superannuation question (relating to rule 4.2) which was to be heard with the ademption questions but was abandoned without reasonable notice.
4. I will hear the parties as to the form of the costs orders to be made, and as to any directions required to be given in the proceedings generally. Such directions may involve determination of an application by the defendant to amend her statement of cross-claim to advance her contention that (upon the proper construction of rule 4.1) the plaintiff is not eligible to participate in superannuation benefits payable consequent upon the death of the deceased.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2017