Tainton v Read [2000] VSC 293

Wills Act 1997; s 34

Re Gare [1952] Ch 80

Re Hoppe [1961] VicRp 64; [1961] VR 381

Re Morton [1963] VicRp 8; [1963] VR 40

Re Robertson [1966] VicRp 26; [1966] VR 196

2. The plaintiff, as executrix of the will dated 17 December 1991 of Herbert Newton Read, who died on 10 February 1998, brings this proceeding by originating motion seeking the determination of the following questions arising in the administration of the estate, in the events that have happened, and on the true construction of the will of the deceased.

1. What, if any, entitlement does the Firstnamed Defendant ("Mrs Read") have pursuant to clause 3 of the Will in respect of the proceeds of sale of the property situate at and now known as 404 Yarra Road Wonga Park ("Yarra Road")?

2. Has the gift to Mrs Read pursuant to clause 3 of the Will of Yarra Road failed by ademption?

3. Is Mrs Read entitled pursuant to clause 3 of the Will to receive during her lifetime the income produced from the investment of the proceeds of sale of Yarra Road?

4. What is the nature and extent of Mrs Read's entitlement pursuant to clause 3 of the Will in the property situate at and now known as 6-12 Toppings Road Wonga Park ("Toppings Road")?

(a) a personal right of residence in Toppings Road, to be enjoyed in accordance with the provisions of clauses 3, 4 and 5 of the Will;

(c) the rights conferred on a tenant for life by the Settled Land Act 1958 ("the Act")?

6. Is the effect of clause 6 of the Will to give the entire residuary estate to Mrs Read?

7. Is the effect of clause 6 of the Will to give to Mrs Read the remainder interest (expectant upon the determination of her personal right of residence or her life estate as the case may be) in Toppings Road?

8. Is the effect of clause 8 of the Will to give to the beneficiaries named therein the remainder interest (expectant upon the determination of her personal right of residence or her life estate as the case may be) in Toppings Road?

9. Upon the death of Mrs Read, is Toppings Road, or such property as may have been purchased in substitution for it pursuant to clauses 4 and 5 of the Will, to be distributed

(b) to the beneficiaries named in clause 8 of the Will?

19. The facts appear from the affidavit of the plaintiff sworn on 29 June 1999. The testator died on 10 February 1998, aged 81 years. He was survived by the three children of his first marriage, who are the plaintiff and the second and thirdnamed defendants. He was also survived by his second wife, the firstnamed defendant, who he married in about 1968, and two stepchildren, the children of her first marriage, who are the fourth and fifthnamed defendants.

22. The testator was an orchardist, and owned land in Wonga Park which he had acquired from his father, and on which he had lived for almost all his life. He grew up in the house at 404 Yarra Road, leaving it to marry his first wife, when he built another house on the land, which was sold at some time in the 1970s. The house at Yarra Road has been tenanted since the testator acquired the land. When the testator married Mrs Read, he built the house now known as 6-12 Toppings Road. Much of the land has been subdivided and sold. The land then remaining unsold, situated at the corner of Yarra Road and Toppings Road, Wonga Park, was subdivided into two blocks by a plan of subdivision which had been certified by the Manningham City Council Registration on 14 July 1997, before the death of the testator. He sold Lot 1, the corner block known as 404 Yarra Road, by a contract entered into on 24 December 1997. The plan of subdivision was registered at the Titles Office after his death and the sale was then completed. Lot 2, fronting on to Toppings Road, and including the house known as 6-12 Toppings Road, formed part of his estate at the date of his death.

25. The testator left a Will dated 17 December 1991 and probate was granted to the plaintiff on 8 April 1999. He left real estate valued at $300,000 and personal estate valued at $238.666.19, of which the greater part consisted of moneys due to him on the sale of 404 Yarra Road. The total net value of his estate after allowing for liabilities was about $526,700. After the appointment of executors ("my Trustees") and a bequest to each of his nine grandchildren, the remaining provisions of the Will continue as follows:

3. I Direct my trustees that they are to allow my wife Ethel Jean Read to reside in my home property situate at Toppings Road Wonga Park during her life time subject to the proviso that she maintains the said property out of her own resources and pays all outgoings in relation to such property including all rates and taxes and impositions of any nature whatsoever and I Further Direct my trustees that any income produced from such property is to be paid and/or transferred to my said wife during her lifetime.

4. I Direct my trustees further that if my said wife should desire during her lifetime to move from that property to another property then my trustees are empowered to sell the property and the proceeds of sale are to be used firstly in relation to the purchase of an alternate residence for my said wife for her to reside in during her lifetime and the residue of the proceeds of sale are to be invested in accordance with the terms of this my Will and the income to be produced therefrom is to be paid to my said wife during her lifetime and upon her death my property or the alternate residence and the residual capital is to form part of my residual estate.

5. I Further Direct my trustees that if my wife should desire a further property in lieu of the alternate property then my trustees may also sell the alternate property and any future properties that my wife wishes to residue [sic] in during her lifetime.

6. As to the then residue of my estate [to trustees upon trust to call in and hold on trust:

(a) To pay debts, funeral and testamentary expenses and duties]

(b) To pay and/or transfer the then residue to my said wife absolutely.

7. [Provision should the testator's wife fail to survive him]

8. After the death of my said wife (should she survive me) I Direct my trustees that they sell my property situate at Toppings Road Wonga Park or the alternate residence that my wife has chosen to live in during her lifetime and which remains in the name of the estate as at the date of my death and that the net proceeds of sale and the residue of my estate be divided into five equal parts or shares with one of such equal parts or shares being paid to my children and stepchildren namely Daryl Newton Read, Jillian Ruth Tainton, Allison Symons, Frank Andrew Ward and John Walter Ward.

9-12. [Provisions that the issue of a child or stepchild shall take the share of a deceased parent, power of advancement, investment power, named solicitors to be employed]

37. The essential principle to be applied in construing a will appears in the well-known passage from the speech of Lord Simon LC in Perrin v Morgan [1943] AC 399 at 406:

[T]he fundamental rule in construing the language of a Will is to put on the words used the meaning which, having regard to the terms of the Will, the testator intended. The question is not, of course, what the testator meant to do when he made his Will, but what the written words he uses mean in the particular case - what are the "expressed intentions" of the testator.

42. The answers to questions 1, 2 and 3 are governed by the decision of Pape J in Re Morton [1963] VicRp 8; [1963] VR 40, where his Honour said at 51:

The true position is, I think, best illustrated by what was said by Farwell J in Re Dowsett [1901] 1 Ch 398, where he decided that if the gift be given simply by a description of the subject as it exists at the date of the execution of the will, it will be adeemed if the subject be subsequently disposed [of] during the lifetime of the testator, but, if, on the contrary, it be given by a description which not only includes the subject of the gift as it then exists, but still includes it in whatever other form it may happen to exist at the date of the death, it is not then adeemed by an subsequent disposal of it, provided that at the testator's death the original subject of the gift is represented by actual property which can be identified.

46. The property described in clause 3 of the will as "my home property situate at Toppings Road Wonga Park" included, as at the date of the Will, the land known as 404 Yarra Road, subsequently comprised in Lot 1 on the plan of subdivision, the subject of the contract of sale. Clearly, on the basis of Re Morton, the gift to Mrs Read of the right to reside in that property, and the gift of income produced from it, were adeemed by the sale, in so far as it applied to that part of the property contained in Lot 1. If that were not applicable, the question would in any case be decided by the operation of section 34 of the Wills Act 1997, providing that, absent a contrary intention (of which none appears) a will takes effect, with respect to the property of the testator, as if it had been executed immediately before the death of the testator. At that time, Lot 1, the portion of the real property known as Yarra Road, had been replaced by personal property, namely the debt to the estate constituted by the proceeds of sale of Lot 1.

49. Mrs Read's entitlement in respect of Lot 2, the remainder of the land described by the testator as "my home property situate at Toppings Road Wonga Park", was, of course, unaffected by the sale of Lot 1.

52. Thus counsel were in agreement, rightly, and I find, that the answers to the first three questions are:

59. The relevant provisions of the Act are as follows:

(1) Any . . . will . . . under or by virtue of which . . . any land, after the commencement of this Act stands for the time being -

(a) limited to or in trust for any persons by way of succession;

The person of full age who is for the time being beneficially entitled under a settlement to possession of settled land for his life shall for the purposes of this Act be the tenant for life of that land and the tenant for life under that settlement.

16. Other limited owners having powers of tenant for life

(1) Each of the following persons being of full age shall when his estate or interest is in possession, have the powers of a tenant for life under this Act, namely -

(g) a person entitled to the income of land under a trust or direction for payment thereof to him during his own or any other life, whether or not subject to expenses of management, . . . unless the land is subject to an immediate binding trust for sale;

71. The "succession" contemplated in section 8(a) is succession on death (Re Hoppe [1961] VicRp 64; [1961] VR 381 at 403). The effect of my findings as to the answers to questions 6 to 9 (see paragraph 18 below) is that under the Will, Toppings Road "stands for the time being limited to or in trust for any persons by way of succession", and accordingly the Will constitutes a "settlement" by virtue of section 8 of the Act, and Toppings Road is settled land.

74. Thus I find that Mrs Read is, by virtue of the right to reside in Toppings Road or in an alternate residence which is conferred upon her by clauses 3, 4 and 5 of the Will (i.e. "under a settlement"), a tenant for life of Toppings Road as a result of the operation of section 12 of the Act. Should I be wrong in that, she has in any case, by virtue of the right to receive during her life the income of Toppings Road or of an alternate property which is conferred upon her by those same clauses, the powers of a tenant for life in respect of Toppings Road as a result of the operation of section 16(1)(g) of the Act. The answers to questions 4 and 5 are therefore:

82. These questions all relate to the disposition of the residue of the estate, and turn on the interpretation of clauses 6 and 8 of the Will. One question which was not raised in the originating motion was as to the meaning of the latter portion of clause 8, which is expressed to dispose of only one of the five equal parts or shares of residue to which it refers. It would seem likely, given the terms of the inapplicable clause 7, and the absence of any expression of the intended distribution of the other four parts or shares, or of the manner in which the share referred to is to be divided among the five recipients of it, that that clause is to be read as though the words "each of" appeared before the words "my children and stepchildren", and I shall proceed on that basis.

85. Mr Cook and Mr Wells both submitted that there were in the Will two mutually inconsistent schemes for the distribution of the residue of the estate, either to Mrs Read under clause 6 or to the children and stepchildren under clause 8_._ Mr Cook considered that clause 8 was more sensible, and should thus take effect, and he also relied on the rule in Re Gare [1952] Ch 80 and Re Robertson [1966] VicRp 26; [1966] VR 196 that where there are conflicting dispositions of residue, the later clause overrides the former.

88. However, as Starke J said in Robertson at 197:

As there is no logical basis for the existence of this rule and as it is in effect an entirely artificial device of interpretation, in the absence of authority, I would be very slow to apply it. But there is no lack of authority. As Harman J said in Gare's Case, at p 83: "It is, however, . . . only a counsel of despair, and will be resorted to by the court only where there is absolute inconsistency from which there is no way out".

92. Mr Wells submitted that in order to give effect to the intention of the testator, clause 6 should be read as applying only to the personal estate of the testator, excluding any interest in any uncompleted and conditional contract of sale. He might well have contemplated at the time of making his will that at the time of his death some part of his estate might have been the subject of a contract of sale. That would preserve clause 8 to deal with the balance of his estate.

95. Mr Phillips, on the other hand, submitted that there was no such "absolute inconsistency from which there is no way out" to use the words of Harman J. He emphasised the significance of the employment twice in clause 6 of the Will of the expression "the then residue". In his submission the scheme of those of the dispositions in the Will which were intended to operate should the testator's wife survive him were clear, and could be summarised as follows:

(a) Clause 3 gave a life interest in Toppings Road to Mrs Read.

(b) Clauses 4 and 5 gave power to the trustees to purchase an alternative residence, using the proceeds of sale of Toppings Road, or to invest those proceeds to provide an income for Mrs Read.

(c) Clause 6 operated on "the then residue" which was the residue of the estate existing at the date of death of the testator, excluding the Toppings Road property which was dealt with by clause 8. The residue at the date of death was to go, not unnaturally in the submission of Mr Phillips, to the testator's widow, Mrs Read.

(d) Clause 8 then dealt with the position after the death of Mrs Read in relation to first, the remainder interest in Toppings Road or whatever other property had replaced it, and second, any proceeds of sale of Toppings Road or other property and accretions to the income generated by the investment of those proceeds. The residue so constituted passed to the children and stepchildren in accordance with that clause.

Thus, he submitted, it could be seen that there was no inconsistency and that clauses 6 and 8 were designed to deal with two distinct separate situations. There was no need to fall back on the "counsel of despair" considered in Gare and Robertson.

102. I find the solution of Mr Phillips to be more probable, in all the circumstances, than the solution of Mr Wells; and it avoids the difficulties raised by Starke J in Robertson which attend the solution of Mr Cook. Accordingly, I find the answers to questions 6 to 9 to be:

6. No, its effect is to give her only that part of the testator's residuary estate which excludes the property known as Toppings Road, Wonga Park.

110. Counsel may wish to make submissions as to the appropriate orders to give effect to the findings set out above and as to costs.