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[2015] QSC 285
Supreme Court of Queensland
2015-10-14
Burns J
Original judgment source is linked above.
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - ASCERTAINMENT OF TESTATOR'S INTENTION - GENERALLY - where the testator entered into a lease of a retirement village apartment in 2003 - where the testator subsequently left a pecuniary legacy to her daughter under her last will in "an amount of money equivalent to that amount received by my estate upon the sale of my interest in" the apartment - where the testator moved to an aged care facility in 2010 and disposed of her interest in that apartment prior to her death in 2014 - where the consideration received for the disposal of that interest was deposited into the testator's bank account and there remained until the date of her death - where the sum banked was received as part of the testator's estate following death - where probate of the will was granted in 2015 - where the applicant executors seek a declaration as to the proper construction of the will - whether the consideration received for the disposal of the testator's leasehold interest in the retirement village apartment was received in consequence of a "sale" - whether the sum received as part of the testator's estate following death was received by the testator's estate - whether the pecuniary legacy is effectual or falls into residue
Retirement Villages Act 1999 (Qld), s 9, s 16
Succession Act 1981 (Qld), s 33C
Allgood & Ors v Blake (1872-73) LR 8 Ex 160, cited
Fell & Anor v Fell & Anor (1922) 31 CLR 268; [1922] HCA 55, applied
King v Wogandt: Re Beutel (deceased) [2014] 2 Qd R 488; [2014] QSC 175, cited
Langston v Langston [1834] EngR 190; (1834) 2 Cl & F 194, cited
Moylan v Rickard [2010] QSC 327, cited
Perrin & Ors v Morgan & Ors [1943] AC 399, cited
Pride v Fooks [1858] EngR 1188; (1858) 3 De G & J 252, cited
Ralph v Carrick (1879) 11 Ch D 873, cited
Re Culbertson (1966) 59 DLR (2d) 381, cited
Re Willis [1996] 2 Qd R 664, cited
Scalé v Rawlins (1892) AC 342, cited
Tatham & Anor v Huxtable & Ors (1950) 81 CLR 639; [1950] HCA 56, cited
The Public Trustee of Queensland v Smith [2009] 1 Qd R 26; [2008] QSC 339, cited
The Trust Company Limited & Anor v Zdilar & Ors (2011) 4 ASTLR 379; [2011] QSC 5, cited
Towns v Wentworth [1858] EngR 371; (1858) 11 Moo PCC 526, cited
Williams v Carlyle Villages Pty Ltd [2010] 2 Qd R 379; [2009] QCA 301, cited
Suthers Lawyers for the respondent Roderick Suthers
[1] Mrs Jessie Suthers was 99 years of age when she died on 14 November 2014. She was survived by her three children - Andrea, Anthony and Roderick. Her last will was executed on 26 February 2009 and, although it was admitted to probate on 11 February 2015, a dispute has arisen as to the meaning of one of its provisions.
[2] Andrea and Anthony, as the executors appointed under the will, have therefore applied to the court for a declaration as to the proper construction of the will.[1] At issue is whether a pecuniary legacy - in an amount to be calculated by reference to the sum received on the disposition of Mrs Suthers' interest in a retirement village apartment - is effectual.
[3] The principles of construction governing the approach to be taken by the court on an application such as this are of long-standing. The object is to discover the testator's intention through examination of the words used in the will.[2] To do so, regard is had to the rules of construction traditionally applied by the courts and the aids to construction contained in s 33C of the Succession Act 1981 (Qld).[3]
At the heart of this interpretative exercise is the consideration of the usual meaning of the language used in the testamentary provision in question, and this is to be done in light of the will read as a whole.[4] If the meaning of the provision is clear, the will shall be given that construction.[5] However, in determining what a testator meant by the words used in the will, the court may receive evidence under the "armchair rule" so as to place itself in the position of the testator at the time when the will was made. In this way, the court can take account of the material circumstances which were known (or ought to have been known) by the testator at the time when he or she used the words contained in the will. The rationale for the rule is to be found in the proposition that "the meaning of words varies according to the circumstances of and concerning which they are used"[6] and, because of that, the court is often assisted by establishing the context in which the testamentary intentions were expressed. Importantly, such a rule applies where those intentions appear, on a plain reading of the will, to be clear as well as in circumstances where s 33C of the Act applies.[7]
[7] Until 2003, Mrs Suthers resided in a home unit situated in Toowong but, in September of that year, she moved to an apartment in a retirement village situated in Taringa. In order to do so, Mrs Suthers entered into a long lease with the owner and a separate written agreement with the owner and operator.[16] What was described as an "ingoing contribution" in the sum of $252,200.00 was paid by Mrs Suthers for the grant of the lease along with a sum by way of management fees. The lease was subsequently registered and, relevantly, it entitled Mrs Suthers to occupy a particular apartment in the retirement village.[17] By 2010, Mrs Suthers required a higher level of care and, accordingly, it was decided to dispose of her interest in that apartment and for Mrs Suthers to move to an aged care facility situated at The Gap. Subsequently, that interest was disposed of and settlement took place on 16 June 2010. In consequence, $240,559.90 was banked to the credit of an account in Mrs Suthers' name, being the net consideration received on the disposal of her interest.
[8] Thus, at the time when her last will was executed, Mrs Suthers was residing in the retirement village apartment but this was no longer the position as at the date of her death. By that time, the net consideration which had been received on the disposal of her apartment had been banked.
[9] At the time of Mrs Suthers' death, her assets consisted of items of personalty, shares in various companies, a refund which would become payable by the aged care facility and funds held in a number of bank accounts in Mrs Suthers' name. The bank funds included the money received by Mrs Suthers on the disposal of her interest in the retirement village apartment. Some of that money had, after receipt, been placed on term deposit on Mrs Suthers' behalf to attract a higher rate of interest, and such deposits were with the same bank.
[10] Clause 4 of Mrs Suthers' last will provides for the distribution of Mrs Suthers' estate. It is, relevantly, in these terms:
"MY EXECUTOR shall hold on trust the whole of my Estate and distribute the same as follows:
4.1.1 an amount of money equivalent to that amount received by my estate upon the sale of my interest in Apartment 94 Aveo, 1 Moore Street, Taringa in the said State;
4.1.2 all my furniture, jewellery, clothing and all other articles of personal, domestic or household use or ornament;
4.2 For my son ANTHONY DAVID SUTHERS my shares in [company names omitted];
4.3 For my son RODERICK JOHN SUTHERS my shares in [company names omitted];
4.4 The residue of my Estate is to be divide (sic) into four (4) equal parts and distributed in the following manner:
4.4.1 two parts for my daughter ANDREA SUTHERS ...;
4.4.2 one part for my son ANTHONY DAVID SUTHERS ...;
4.4.3 one part for my son RODERICK JOHN SUTHERS ..."
[11] It will be noticed that, under clauses 4.1.3, 4.2 and 4.3, Andrea, Anthony and Roderick is each to receive a gift of specific shares and that Andrea is also to receive an amount of money (clause 4.1.1)[18] as well as personalty (clause 4.1.2). Otherwise, the residuary estate is left to the children in the proportions indicated in clause 4.4.
[12] It is clause 4.1.1 that is in dispute. The executors contend that, on the proper construction of this provision, it is effectual to leave to Andrea a sum of money equivalent to the sum received on the disposal of Mrs Suthers' interest in the retirement village apartment, that is to say, $240,559.90, and a declaration is sought accordingly. On the other hand, Roderick contends that, when the clause is properly construed, the pecuniary legacy fails. If Roderick is right, that sum of money will fall into residue.
[13] I interpolate that some criticism was made of the approach taken on behalf of the executors in the making of this application. It was submitted that the executors should have adopted a "neutral stance" by which "all possible constructions" were placed before the court but, instead, advanced a particular construction which, if upheld, will result in a payment from the estate to Andrea pursuant to clause 4.1.1. I think that criticism was misplaced. It is clear from the correspondence passing between the solicitors representing the executors and those representing Roderick that the executors (and those advising them) formed an early view that the pecuniary legacy was effectual, and they have maintained that view throughout. The executors' construction of clause 4.1.1 was contested, and the reasons why articulated, in correspondence forwarded on behalf of Roderick. The executors placed all such correspondence before the court. Furthermore, in a letter dated 31 March 2015, Roderick's solicitors made it clear that their client disputed the executors' construction, called on the executors to "obtain an interpretation by the Court" and said that, if this did not occur, an application would be made to the court on behalf of Roderick. Given these matters, it was never going to be the case that the court would be under any misapprehension about the competing arguments, or who is propounding them. In circumstances where, as here, the executors have no genuine belief in the merits of a competing construction, they can scarcely be criticised for declining to advance it to the court.
"... my home unit situated at [...] Toowong or such other principal place of residence owned by me at the date of my death."[19]
" ... an amount of money equivalent to that amount received by my estate upon the sale of my interest in Apartment 94 Aveo, 1 Moore Street, Taringa in the said State".
[15] In my opinion, clause 4.1.1 is capable of being construed by a consideration of the usual meaning of the words used in light of the circumstances in which the will was made. There is no need to have recourse to the type of extrinsic evidence made admissible by s 33C of the Succession Act 1981 (Qld) to determine Mrs Suthers' testamentary intention or, expressed in another way, to determine what she meant by the words used in that clause.
[16] The circumstance that Mrs Suthers had, over the course of 13 wills (including her last will), consistently made additional provision in Andrea's favour can be taken into account by the court applying the "armchair rule". Indeed, there would appear to have been good reason for making additional provision in Andrea's case; she cared for, and assisted, her mother in her twilight years.[22] It is also to be taken into account in this regard that, in the first six of the wills to which I have referred, this additional provision was specific - the home unit "or such other principal place of residence" owned by Mrs Suthers at the date of her death. That testamentary approach changed when Mrs Suthers moved into the retirement village. No longer was a devise of specific real property made. Mrs Suthers' living situation had changed and, as part of that, she had paid the "ingoing contribution" of $252,200.00 for the grant of the lease of the retirement village apartment. Clearly, the approach taken by Mrs Suthers from then was to make a pecuniary legacy in Andrea's favour, the quantum of which was intended to be equivalent to the amount that she expected would be received for the disposal of her leasehold interest in that apartment. But, although Mrs Suthers' testamentary approach changed, her testamentary intention did not. To the contrary, I find that, throughout each of the 13 wills, it was consistently resolute - Mrs Suthers intended to make additional provision for Andrea under her will either by a devise of her residence or in a money sum calculated by reference to the proceeds received on the disposal of the leasehold interest in her retirement village apartment.
[19] The nature of Mrs Suthers' interest in the retirement village apartment was a "right to reside" pursuant to the lease entered into by her with the owner. Such a right is essentially contractual in nature and, in this case, derived from the lease, but it is also a right which is recognised by the Retirement Villages Act 1999 (Qld).[26] When Mrs Suthers left the retirement village apartment, she was paid an "exit entitlement", something which is defined in that Act[27] as well as the lease.[28] By s 16 of that Act, an "exit entitlement" includes the amount that is payable in consequence of the "settlement of the sale of the right to reside in the accommodation unit". Otherwise, what was covenanted under the lease to occur when Mrs Suthers terminated it was that the scheme operator would be given the exclusive right to find a person to accept a new lease of the apartment, provided that this occurred within six months of the termination date.[29] If the scheme operator was unsuccessful in finding a person to accept a lease by the end of that period, Mrs Suthers was at liberty to engage a real estate agent to locate such a person. To facilitate this sale process, Mrs Suthers was required to negotiate with a view to agreeing with the scheme operator, if possible, on an "agreed resale value". When the new lease was entered into, that person would be required to pay an "ingoing contribution", just as Mrs Suthers had in 2003, and, from that sum, was to be deducted various charges including the "costs of sale".[30] This expression was defined in the lease to mean the "costs of sale of a new lease over the accommodation unit including any valuation fees".[31] As it happened, the net proceeds of sale were indeed paid to Mrs Suthers as her "exit entitlement", and this is the sum of $240,559.90 which was subsequently deposited to the credit of her bank account.
[21] It was submitted on Roderick's behalf that the words used in clause 4.1.1 "clearly contemplate a disposal of the [apartment] post death" and that they "expressly excluded a disposal of the [apartment] during the testator's lifetime".[32] It was contended that, because the sale occurred more than four years before Mrs Suthers' death, the "exit entitlement" was received by Mrs Suthers and not by her deceased estate.
[22] This argument fails on the facts. The net proceeds of sale making up the "exit entitlement" were effectively preserved as bank deposits in Mrs Suthers' name and, on her death, those funds were made available to her executors. When that occurred, those proceeds were "received by [her] estate".
[23] But, even if that were not the case, clause 4.1.1 provided for a demonstrative legacy. Mrs Suthers did not, by that provision, leave the "exit entitlement" to Andrea. Rather, she left a sum of money to Andrea in an amount equal to the "exit entitlement". The use of the words "amount of money equivalent to that amount received" makes that clear. If a specific legacy was intended, there would have been no need for such words. Instead, clause 4.1.1 could simply have provided for "the amount of money received ... upon the sale of my interest in Apartment 94". Further, to the extent that it might be thought that the use of the word "upon" in clause 4.1.1 reflects an intention that the pecuniary legacy should only pass if the sale occurred after Mrs Suthers' death, such a conclusion would be completely contrary to the testamentary intention I have earlier found to have existed, that is to say, that what Mrs Suthers meant by clause 4.1.1 was to make a pecuniary legacy in Andrea's favour in a sum equal to the proceeds received on the disposal of the leasehold interest in her retirement village apartment.
[24] It follows that I am of the opinion that the meaning of the language used in clause 4.1.1, as considered in light of the will read as a whole and the circumstances in which the will was made, is such as to provide for a pecuniary legacy in Andrea's favour, in an amount equivalent to the sum received for the sale of her leasehold interest, whenever that sale occurred.
[25] For the above reasons, I shall declare that, on the true construction of the last will of Mrs Suthers dated 26 February 2009, Andrea is entitled, pursuant to clause 4.1.1 of the said will, to the payment of $240,559.90.
[26] I shall hear the parties on the question of costs.
[1] For observations about the source of the court's jurisdiction to make such a declaration, see King v Wogandt: Re Beutel (deceased) [2014] QSC 175; [2014] 2 Qd R 488 at [38]- [41] per Jackson J.
[2] Perrin & Ors v Morgan & Ors [1943] AC 399 at 406 per Viscount Simon LC; The Public Trustee of Queensland v Smith [2008] QSC 339; [2009] 1 Qd R 26 at 31, [20] per Atkinson J.
[3] Smith at 33, [26] per Atkinson J.
[4] Fell & Anor v Fell & Anor [1922] HCA 55; (1922) 31 CLR 268 at 273-274 per Isaacs J.
[5] Smith at 33, [26] per Atkinson J.
[6] Allgood & Ors v Blake (1872-73) LR 8 Ex 160 at 162-164 per Blackburn J. And see Perrin at 420 per Lord Romer; Smith at 32-33, [24] per Atkinson J.
[8] As to which, see Smith at 32-33, [24]-[25] per Atkinson J.
[9] Ralph v Carrick (1879) 11 Ch D 873 at 878 per Cotton LJ; cited with approval by Isaacs J in Fell at 273.
[10] Moylan v Rickard [2010] QSC 327 at [34] per Peter Lyons J, citing Re Willis [1996] 2 Qd R 664 at 667.
[11] Fell at 275 per Isaacs J, citing Langston v Langston (1834) Cl & F 194 at 243 per Lord Brougham LC; Moylan at [34] per Peter Lyons J.
[12] Fell at 274 per Isaacs J, citing Towns v Wentworth [1858] EngR 371; (1858) 11 Moo PCC 526 at 543; Moylan at [34] per Peter Lyons J.
[13] Fell at 274 per Isaacs J, citing Scalé v Rawlins (1892) AC 342 at 344-345 per Lord Watson.
[14] Fell at 274 per Isaacs J, citing Langston at 236-237 per Lord Brougham LC.
[15] Fell at 274 per Isaacs J, citing Pride v Fooks [1858] EngR 1188; (1858) 3 De G & J 252 at 266 per Knight Bruce LJ. And see Tatham & Anor v Huxtable & Ors [1950] HCA 56; (1950) 81 CLR 639 at 645 per Latham CJ and at 651 per Kitto J.
[16] The separate agreement was entitled "Agreement to Lease" and dated 5 September 2003.
[18] It is uncontroversial that the apartment described in clause 4.1.1 is the apartment that was leased by Mrs Suthers in the retirement village.
[19] The wills containing a devise in these terms were executed on 9 December 1997, 11 February 1999, 26 March 1999, 25 January 2001, 6 June 2002 and 25 February 2003.
[20] These wills were executed on 10 November 2003, 21 February 2005, 28 October 2005, 12 September 2006, 16 March 2007 and 12 March 2008.
[21] The only difference is in the description of the apartment; the wills executed on 10 November 2003, 21 February 2005, 28 October 2005, 12 September 2006 and 16 March 2007 use the description "Apartment 94 Forest Place" whereas the will executed on 12 March 2008 and the last will use the description "Apartment 94 Aveo" (emphasis added).
[22] See exhibit AS-15 to the affidavit of Andrea Suthers (being a letter from Roderick's solicitors dated 12 January 2015 in which it is acknowledged that "Andrea is entitled to a greater than one third share of the Estate for her assistance to the Deceased while she has lived in an aged care home and nursing home").
[23] Re Culbertson (1966) 59 DLR (2d) 381 at 384; Moylan at [42].
[24] As to which, see the discussion in Moylan at [37]-[46] per Peter Lyons J.
[25] Moylan at [50]-[59] per Peter Lyons J; Re Viertel [1996] QSC 66; [1997] 1 Qd R 110.
[26] See s 9. The nature of such an interest was discussed by Fraser JA in Williams v Carlyle Villages Pty Ltd [2009] QCA 301; [2010] 2 Qd R 379 at [25]- [33].
[32] Paragraph 22 of the written submissions on behalf of Roderick dated 10 August 2015.
Suthers & Anor
Suthers & Ors [2015] QSC 285
(1922) 31 CLR 268
(1950) 81 CLR 639
[6] The court is bound to construe the will "as trained legal minds would do".[9] That, however, is not to say that the will must be construed in a strictly technical or legalistic sense; its construction should be "sensitive to the factual context of ordinary life and circumstances".[10] Further, the court should lean towards a construction which preserves, rather than destroys, its effect.[11] If the will shows that the testator must necessarily have intended that an interest be given but there are no words in the will which expressly have that effect, the court is to "supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has on the whole will, sufficiently declared".[12] But, as to this, the court will not give effect to any intention which is "not expressed or plainly implied"[13] in the language of the will; there is no room for "gratuitous, groundless, fanciful implication".[14] On the other hand, if the contents of a will show that a word has been "undesignedly omitted or undesignedly inserted, and demonstrate what addition by construction or what rejection by construction will fulfil the intention with which the document was written, the addition or rejection will by construction be made".[15]
[14] That said, it is relevant to observe that Mrs Suthers made 12 previous wills between 9 December 1997 and 12 March 2008. A copy of each is in evidence. It is important to note these features:
[17] Indeed, I am in no doubt that what Mrs Suthers meant by the words used in clause 4.1.1 of her last will was the making of a pecuniary legacy in Andrea's favour in a sum equal to the proceeds received on the disposal of the leasehold interest in her retirement village apartment. This was a demonstrative legacy, as opposed to a specific or general one. In other words, it was an "an unconditional gift of a specified amount accompanied by a reference to a particular fund or source for payment thereof".[23]
[18] For Roderick, however, although it was not suggested that clause 4.1.1 gave rise to a gift in specie which was adeemed,[24] or that it was conditional on Mrs Suthers remaining in occupation of the retirement village apartment,[25] it was nevertheless argued that the pecuniary legacy failed because: (1) there was no "sale" of Mrs Suthers' interest in the unit; and (2) no amount of money was received by Mrs Suthers' estate.
[20] For Roderick, it was submitted that it was the scheme operator, and not Mrs Suthers, who sold her interest in the apartment. That might be factually correct in the narrow sense that the scheme operator acted as a broker for the sale, but the clauses of the lease to which I have referred as well as the overarching provisions of the Act make it clear that Mrs Suthers was the seller of her interest in the retirement village apartment. Thus, there was a "sale" within the meaning of clause 4.1.1 of the will. Furthermore, the "exit entitlement" paid to Mrs Suthers was the "amount of money received... upon the sale of my interest in apartment 94" which is referred to in that clause.