State Trustees Limited v Linnett [1999] VSC 308

19. In essence, the plaintiff seeks determination of the question as to whether the apparent devise in the will of the property to the sons of the testatrix constituted an absolute interest in the whole of the estate or whether the interest devised to the sons was qualified.

22. Albert Bruce Membrey left a will dated 20 May 1992. The beneficiaries of the estate of Albert Bruce Membrey are the Bethlehem Hospital and the Alfred Hospital. Probate of that will was not sought as the only asset of the estate is its interest, if any, arising under the will of the testatrix.

25. Barry Alfred Membrey left a will dated 3 August 1981 and the sole beneficiary was the second defendant.

28. Albert Bruce Membrey and Barry Alfred Membrey were twins and adopted by the testatrix and her late husband. No evidence is available as to whether the adoptions of the sons were effected formally. Neither son married nor had issue.

31. The death certificate of the testatrix reveals that at the time of her death in 1975 the sons were aged 41. It was submitted and can be reasonably concluded that if the sons of the testatrix were adopted when they were young they would have been adopted in or about the mid 1930s. I was informed that the plaintiff has no information about the identity of the natural parents of the two sons. Indeed, the plaintiff believes that searches to identify the next of kin of the two sons might be fruitless and that it would in all likelihood be impossible to locate and gain access to any records which would reveal the identity of the natural parents of the two sons.

34. The executor and sole beneficiary of the estate of Barry Alfred Membrey is Wayne Dunne, the second defendant in the proceeding. Mr Dunne deposed on affidavit that he and Barry Alfred Membrey were good friends and had known each other for many years prior to the death of the latter in June 1998. Mr Dunne has deposed that Barry Membrey told him during his lifetime that he and his brother, Albert Bruce Membrey were adopted when they were approximately eight years old by the testatrix and that they had no recollection of their past and that their place of birth and origins were unknown and had never been discussed within the family. Mr Dunne deposed, further, that he has no knowledge as to whether Barry Alfred Membrey and/or Albert Bruce Membrey were formally adopted by the testatrix. He believes that the two brothers were brought up in Dandenong by the testatrix as members of her family and that they had no relatives. Mr Dunne deposed as to his belief that the two brothers were twins as they were very similar in appearance. He has no knowledge of the existence of a birth certificate for Barry Alfred Membrey.

37. The first defendant is the executor appointed under the will of Albert Bruce Membrey.

40. The plaintiff in its capacity as executor did not seek to support a particular position before me, rather, to direct the attention of the court to the relevant principles and authorities but, on balance, urged that the proceeds of sale of the property are held on trust for the next of kin of the sons and to determine that the will did not give to the sons an absolute interest in the property.

43. Mr Boaden who appeared for the plaintiff placed emphasis upon the actual words used by the testatrix in the will. Firstly, he drew attention to the words "I give devise and bequeath unto Albert ... and Barry ... all my real and personal property to be equally divided between them" and which words it was submitted were qualified by the words "should there be any dwelling house ... to be jointly owned by Albert and Barry for their own use during life". It was submitted that the words indicated that the testatrix intended the dwelling house to be given to the sons for their joint lives and during the life of the survivor. It was submitted that such construction was strongly supported by the use of the words "for his life". In particular, it was submitted that the direction that "upon the death of the two beneficiaries" the property was to be sold and equally shared by the next of kin was a forthright direction. It was submitted that construing the earlier provisions in the will as giving the sons an absolute interest as distinct from a life interest would negate such clear direction and deprive the final words of the will of any purpose or function in the will.

46. It is a well-established principle that adopting a construction of words in a will which deprive such words of any meaning or effect is likely to lead to a misconstruction of the contents of the will. As observed in Williams on Wills, 6th ed. At 445:

"A will must be so construed that effect is given to every word. The court has no right to disregard a word provided some meaning can be given to it, and that meaning is not contrary to some intention plainly expressed in other parts of the will. The court does not as a rule import to the testator that he uses additional words without some additional purpose or without any purpose at all".

50. Ms Sparkes who appeared for the third defendant representing the as yet unascertained next of kin, if any, of the two sons of the testatrix emphasised that three of the last four sentences of the will contained descriptions of the estate as being "for life". Ms Sparkes emphasised that the dwelling house was devised "jointly" to the sons "for life"; a direction was given in the event of one son pre-deceasing the other "for life"; and, finally, there was provision for disposition after the death of the two sons. It was submitted that as a consequence the earlier gift in the will was modified and became a gift of the property to the sons "for life". It was submitted, further, that the words of limitation in the will are unambiguous but that if there was any ambiguity in the use of the words "property" the earlier gift was modified by the appearance of the later words referring to "dwelling house" being held "for life" and the fact that the words "for life" appeared twice after the initial gift in the will.

53. Where there are inconsistent clauses in a will, the general rule is that the last clause prevails over an earlier one. (See Doe d Leister v Biggs (1927) ER 1017). This is the rule commonly referred to as "the rule of despair". Notwithstanding this rule the court must construe the will as a whole. On the basis of the principle expressed in Williams effect must be given to every word. The testatrix used the term "for life" rather than the expression "life tenancy". The courts have held that the expression "life tenancy" is a legal term and that a testator intends always that such a term is used in its legal sense unless the context of the will indicates a contrary intention. (See Re Taylor, Taylor v Tweedie (1923) 1 Ch 99, 105 (CA)). Such is not the case here and the words "for life" do not indicate automatically an intention to create a life interest.

56. There are particular observations to be made about the will and the expressions used by the testatrix. Firstly, the will was a holograph will. The difficulty in construing the will lies in the indication and expression by the testatrix at the outset of a gift of the property but qualified by subsequent expressions that constitute indicia of a life interest only. Lord Hardwicke LC observed in Garth v Baldwin [1755] EngR 118; (1755) 2 Ves Sen 646, 28 ER 412 that a court is not bound by the legal technical sense of words used but should follow the intention of a testator. Lord Eldon LC observed in Kilpatrick v Kilpatrick [1807] EngR 209; (1807) 13 Ves 476, 33 ER 373 that a court will struggle against a construction that would defeat the obvious intention of the testator. Where a will has not been drawn professionally and discloses an inaccuracy, the High Court has held that the duty of the court is to read the will and "discover those intentions". (See Alston v Equity Trustees Executors and Agency Co Ltd [1912] HCA 34; (1912) 14 CLR 341, 343-344 per Griffiths CJ). In a similar approach, the English Court of Appeal has held that where a testatrix has made a will without professional assistance the expressions used in the will are not to be construed literally and technically. (See Re Taylor; Taylor v Tweedie, supra).

59. There are further statements of principle that provide guidance as to the proper construction of a will as in the present circumstances. In Theobald, The Law of Wills, 8th ed., at 659:

"If there is an immediate gift to A, and a gift over in case of his death, or any similar expression implying the death to be a contingent event, the gift over will take effect only in the event of A's death before the testator ... But, as a rule, when there is a gift to A indefinitely, followed by a gift at his decease, A will take only a life interest."

63. In Jarman, The Law of Wills, 8th ed., at 1182:

"Although a gift of personal property to A, without more, prima face confers an absolute interest, it may appear from the subsequent provisions of the will that the testator intended A to take only a life interest, if the words cannot otherwise have effect given to them. For although a gift to A, followed by a gift to B contingently on A's death, is, in the absence of any controlling context, construed as an absolute gift to A if he survives the testator, so that the gift to B only takes effect in the event of A's death in the lifetime of the testator, yet if the gift is to A, and 'after', or 'on' or 'at' his death to B, the prima facie construction is that the testator intends to give a life interest to A, with remainder to B".

67. These statements were cited with approval by Tadgell J (as he then was) in State Trust Corporation of Victoria v Taylor [1993] VicRp 19; (1993) 1 VR 282, 287. In that case the testatrix made a holograph will in terms:

"I hereby give all my money, in State Savings Bank and personal effect to Elsie May Baker. And all deferred Army pay to Miss Eva Mcleod ... on death of Elsie May Baker I leave everything to Eva Mcleod."

71. Tadgell J considered the above principles stated in Jarman and Theobald and determined that the circumstances of the particular will distinguished it from the application of those statements of principle. The learned judge observed (at 288):

"Counsel for the defendant submitted that the words 'on death' in the third sentence of the will import a succession because, as I gathered it, they involve a modification of the mode of enjoyment by the testator's mother of what would otherwise be construed as absolute gifts to the mother: cf. E.g. Re Houghton, Houghton v. Brown (1884) 53 L.J. Ch. 1018, at p.1020. Notwithstanding the use of the words 'on death', and granting that in some contexts they may be words of succession, I can see nothing in the circumstances of this very crude and simple will to suggest that, having regard to the nature of the gifts to his mother, the testator intended to modify or cut down her enjoyment of them. To attribute to him such an intention would be, I think, to give him credit for far greater sophistication than the terms of the will, read as a whole, suggest he had. Moreover, if the gifts to the testator's mother were intended to be affected by the third sentence, there is reason to suppose that the gift of deferred Army pay to Eva McLeod might be similarly affected. There is no sensible reason that I can see for supposing that the testator did not intend both his mother and Eva McLeod to have immediate and absolute enjoyment upon his death of what he intended to give to them. This conclusion is really sufficient to distinguish all the cases to which counsel for the defendant referred. I shall not mention them beyond saying that they all concerned gifts of specific property which, on one view, were absolute gifts but in respect of which it was at least possible rationally to argue that the donor showed an intention to modify or cut down the donee's enjoyment of them. This in my opinion is not such a case."

75. In the matter before me there is nothing to support the submission that the testatrix intended her sons to have a life interest as distinct from immediate and absolute enjoyment upon her death save for the provision that in the event of the death of both sons the property was to be devised to their next of kin.

78. From the very little that is known about Barry Alfred Membrey and Albert Bruce Membrey it can be reasonably concluded that at the time the testatrix made the will the sons were aged about 39 years. It might be reasonably concluded that notwithstanding their more mature years the testatrix expected that at a future time her sons would marry and have children. Of itself, exploring such possible expectation on the part of the testatrix would constitute no more than speculation. Nevertheless, it is significant that the sons did not know anything as to their background save that they were adopted and, furthermore, that their background history, in particular, that concerning any next of kin arising from such background was never apparently revealed to them. It could be reasonably concluded in the circumstances of this matter that if the testatrix had a specific intention of ensuring that after her death her sons would have a life interest only and that upon their death the property would pass absolutely to next of kin who were unidentified begs an unusual if not strained construction of the will and the intention of the testatrix. In my view, it can be readily concluded that if the testatrix intended the sons to have a life interest in the property only with a remainder interest upon their death to their next of kin the testatrix would have identified such next of kin. Such construction is supported by two matters. Firstly, the difficulties acknowledged by the plaintiff as executor in ascertaining the next of kin of the two sons. It can be reasonably assumed that in the course of drawing her will the testatrix would have been conscious of the fact that if she gave a life interest only to her sons with a gift in remainder to their next of kin such class or group could never be identified in the absence of provision of information by her and which in turn would create an intestacy. It is a well established principle that in determining the construction of a will the courts will avoid an intestacy. Whilst at this point no intestacy has been shown it appears highly likely that if I was to adopt the construction urged on behalf of the plaintiff and the third defendant I would be facilitating an intestacy So much is acknowledged in an affidavit filed on behalf of the plaintiff and sworn by its solicitor wherein it is deposed that on the basis of the experience of the Office of the State Trustees Limited (and I interpolate a longstanding and experienced executor and administrator of deceased estates) it is highly unlikely the next of kin of the sons could ever be identified.

81. The second matter to support the construction of an absolute interest to the sons is that when the whole will of the testatrix is examined it reveals that she made provision in the second or latter part of the instrument for the housing of the sons in the event that there was insufficient personal property in her estate to satisfy any debts and testamentary expenses making necessary the sale of any real estate that might form part of her estate. This approach was urged by Mr R.J. McInnes who appeared for the 1st and 2nd defendants.

84. In Brennan v Permanent Trustee Co of NSW Ltd [1945] HCA 17; (1945) 73 CLR 404, Dixon J observed at 414:

"But, to determine the meaning of the will, the language of the testator must be read in the sense which he himself appears to have attached to the expressions he used, that is, unless a rule of law gives them some fixed operation. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expression are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared. That is the rule of interpretation expressed in the well-known passage in the judgment delivered in the Privy Council by Lord Kingsdown in Towns v Wentworth (1). Further, the court may take into account the circumstances to which the will is to be applied as they existed at the time it was executed."[1]

88. In Tatham and Anor v Huxtable and Ors [1950] HCA 56; (1950) 81 CLR 639 Kitto J observed (at 651):

"The only sense in which it is true to say that a court of construction may correct mistakes in a will is that that court may give effect to inferences obtained from the will as a whole (with the assistance of evidence of surrounding circumstances if ambiguity in the will justifies resort to such evidence ... notwithstanding that to do so involves an alteration of the words used".

92. Drawing on the principles stated by the authorities and applying them to the will of the testatrix I am satisfied that the words of the will supported by the surrounding circumstances of the adoption of the two beneficiary sons and the anonymity of their "next of kin" militate strongly against the conclusion that the testatrix intended to provide the sons with no more than a life interest. I am satisfied that a similar approach ought be applied in this matter as was applied in State Trust Corporation of Victoria v Taylor, supra. The will of the testatrix was simple and there is nothing in the circumstances surrounding its drafting to indicate that the testatrix intended to cut down the enjoyment of her sons of the interest she gave to them. To do so would superimpose upon the testatrix much legal sophistication which the simple terms of the will do not support. When allowance is made for the adoption history of the two sons and the apparent secrecy that surrounded the history there could be no logical reason for the testatrix to create a remainder interest in favour of persons who were unidentified and would in all likelihood never be identified without disclosure by her. It can be reasonably inferred from all the surrounding circumstances that the testatrix knew and intended that the identity of the next of kin of the two sons would go with her to her grave.

95. These circumstances justify distinguishing the authorities upon which Mr Boaden and Ms Sparkes rely. It follows that the testatrix gave to Albert Bruce Membrey and Barry Alfred Membrey an absolute interest in the property. It follows, further, that the questions in the originating motion are answered:

1a. The executors of the estates of Albert Bruce Membrey and Barry Alfred Membrey;

[1] [1858] EngR 371; (1858) 11 Moore P.C. 526, 543; [1858] EngR 371; 14 ER 794, 800.