The Estate of Thwaite (Deceased)

Catchwords: SUCCESSION — Trusts and trustees — Judicial advice, Trustee Act 1925 (NSW), s 63
SUCCESSION — Construction — General principles — Structure and scheme of will
SUCCESSION — Construction — Gifts

Legislation Cited: Succession Act 2006 (NSW)
Trustee Act 1925 (NSW)
Valuation of Land Act 1916 (NSW)

Cases Cited: Ashton v Ashton [2010] QSC 326
Betts v Connolly (1970) 120 CLR 417; [1970] HCA 18
Butlin v Butlin (1966) 113 CLR 353; [1966] HCA 4
De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351
Estate of Fabro, deceased [1965] SASR 69
Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234
Fell v Fell (1922) 31 CLR 268; [1922] HCA 55
In re Solomon [1946] VLR 115
Muir v Winn [2009] NSWSC 857
Parry v Haisma [2012] NSWSC 290
Perrin v Morgan [1943] AC 399
Re Doland’s Will Trusts [1970] Ch 267
Re Redfern (1877) 6 Ch D 133
Re Smith [1948] Ch 49 at 53
Re Whelan [1961] VR 706
Re Whitrick (deceased) [1957] 1 WLR 884
Tatham v Huxtable (1950) 81 CLR 639; [1950] HCA 56
Towns v Wentworth (1858) XI Moore 526; 14 ER 794

Texts Cited: David M Haines, Construction of Wills in Australia (1st ed, 2007, LexisNexis)

Category: Principal judgment

Parties: Stephen William Finney as Executor of the Estate of the late Gordon John Thwaite (Plaintiff)

Representation: Counsel:
B Burke (Plaintiff)
Solicitors:
BakerLove Lawyers

File Number(s): 2025/76290

Publication restriction: Nil

JUDGMENT

1. The plaintiff, Mr Stephen Finney, is the executor of the estate of the late Gordon John Thwaite (the deceased) who died on 8 July 2022. By a summons filed on 26 February 2025, the plaintiff seeks judicial advice under s 63 of the Trustee Act 1925 (NSW) regarding the construction of cl 4.1.7 of the will of the deceased, in particular that, on its proper construction, the clause means that the sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite pursuant to that clause was to be a sale at a price being one half of the Valuer-General’s valuation of the whole of the property known as 54 Kalinda Road, Bar Point as was applicable at the date of the deceased’s death.

2. As this is a matter concerning members of the same family, I will use their first names, without intending any disrespect.

Background

3. I adopt the following factual background taken from the statement of facts filed by the plaintiff.

4. The deceased died as a widower and was not in a de facto relationship at the time of his death.

5. The deceased was survived by his three adult children, sons Mark and Kim and a daughter Ann.

6. The last will of the deceased is the will dated 5 July 2012 (will), probate of which was granted to the plaintiff on 15 February 2023.

7. Mr Finney was a friend of the deceased and is not a beneficiary under the will.

8. The deceased’s assets at the time of his death had a value of approximately $2.3 million, principally comprising cash deposits with the Commonwealth Bank of Australia of $1.5 million, a refundable accommodation deposit with a retirement village, a portfolio of listed shares, some items of jewellery, his interest in a property at 54 Kalinda Road, Bar Point NSW 2083 (the propert****y) and his one quarter interest in a waterfront licence (jointly with Kim and Mark).

9. At the time of the deceased’s death, the property was owned by the deceased and Kim, as tenants-in-common in equal shares. A parcel of land adjoining the property was owned by Mark at the time of the deceased’s death. Both properties adjoin the Hawkesbury River and the deceased, Kim and Mark had the benefit of a licence to use a wharf located at the waterfront.

10. The scheme of the will is straightforward. After appointing Mr Finney as sole executor and trustee, clause 4 sets out various gifts of jewellery to each of his children, death and legacies between 10,000 and $20,000 to three named beneficiaries and concludes with cl 4.1.7.1 which deals with the deceased’s half share in the property, as follows:

4.1 I GIVE the following gifts:

…

4.1.7 To my Son Kim Gordon THWAITE (DOB ##) I GIVE the option of purchasing my half-share of the property known as 54 Kalmda Road, BAR POINT, NSW 2083, at the Valuer-General’s valuation figure at the time of my death.

4.1.7.1 IN THE EVENT that Kim Gordon THWAITE (DOB: ##) does not wish to purchase my share of 54 Kalma Road, BAR POINT, NSW 2083, I GIVE my Son, Mark William THWAITE (DOB: ##), the option of purchasing my half-share of the property known as 54 Kalmda Road, BAR POINT, NSW 2083, at the Valuer-General’s valuation figure at the time of my death.

4.1.7.2 IN THE EVENT that Mark William THWAITE (DOB: ##) does not wish to purchase my share of 54 Kalma Road, BAR POINT, NSW 2083, then my share shall be sold.

11. The proceeds of sale under whichever of the alternatives in clause 4.1.7 applied will fall into residue which is dealt with by cl 5 of the will. Under that clause, the residue of the estate is divided into three equal shares, with one share to be divided between Mark and his two daughters equally, one share to be divided between Kim and his son equally and one share to be divided between Ann and her daughter equally (see clause 5 of the will).

12. It is not in dispute that the reference in cl 4.1.7 to ‘Kalmda Road’ is an error and should be to ‘Kalinda Road’. At issue is the meaning of ‘at the Valuer-General’s valuation figure at the time of [the deceased’s] death’ appearing in the chapeau and also cl 4.1.7.1.

13. On 10 August 2022, Kim exercised his option to purchase the deceased’s one half share of the property.

14. The Valuer-General’s valuation for the whole of the property as at 1 July 2022 (shortly before the deceased’s death) was $271,000.

15. On 19 June 2023, the deceased’s one half share of the property was transferred to Kim for a stated consideration of $135,500.

16. On 11 October 2023, an interim distribution was made to the residuary beneficiaries. The amount of $135,500, being the consideration payable in relation to the transfer which occurred on 19 June 2023, was deducted from the distribution paid to Kim.

17. On 4 July 2023, solicitors acting for Mark wrote to the executor intending that the price should have been $271,000. The letter states relevantly:

… clause 4.1.7 of the Will gives Kim Gordon Thwaite an option to purchase the half-share “… at the Valuer-General’s valuation figure at the time of my death”. $271,000, was the only “Valuer-General’s valuation figure at the [relevant] time”. The Valuer-General does not issue valuation figures for a half-share of property. Nor did the Will indicate that the price would be half the Valuer-General’s valuation figure. It is clear (and unambiguous) that the price to be paid for the half-share was the Valuer-General’s valuation figure for the property. Would you please clarify the basis on which the half-share in the property was acquired for $135,500 rather than the valuation figure referred to in the Will?

18. When the interim distribution was made on 11 October 2023 a sum of $500,000 was retained in the estate pending the resolution of the claim made by Mark. The executor wishes to distribute the remainder of the estate.

19. Documents found among the deceased’s papers after his death included:

20. A valuation by the Valuer-General for another property which was addressed to the deceased and dated 4 March 2005.

21. A letter signed by the deceased and dated 24 July 2007 (headed ‘Letter to be left with my last will …’), which states that the deceased’s father in his will had left the property to the deceased and his sister, Margaret, and that when Margaret wanted to sell the property, he had negotiated a price for his eldest son, Mark, to purchase Margaret’s share but when Mark could not obtain the funds to do so, Kim purchased it. The letter goes on to state that:

The property is registered in my name and my second son’s name (Kim) – a half share each. I would therefore wish that my share of the property be left to my second son Kim on the condition in my Will so he will then own the property solely in his name.

20. Facts known to the deceased at the time the will was drafted included:

21. The property was transferred from William Hill Thwaite (the father of the deceased and Margaret Gow) to the deceased and Margaret Gow as devisees on 28 February 1992 after probate of the will of William Hill Thwaite had been granted on 20 September 1991.

22. Kim purchased his one half share of the property from the deceased’s sister, Margaret, in 2006 for consideration of $105,000.

23. The improvements on the property at all relevant times, including the date of death, consisted only of a rudimentary shed, and a compost toilet was also present at the property.

24. On 16 April 2025 the plaintiff’s solicitor requested the Valuer-General to provide a valuation of the deceased’s 50% interest in the property as at July 2022. By email dated 2 May 2025, he received a response from an officer at the Valuer-General stating ‘the value of the 50% share, would be 50% of the valuation provided on 1 July 2022 which is $271,000. So the value of the 50% share would be $135,000’, and noting that this was the ratable (unimproved) vacant land value.

25. Subsequently, the plaintiff’s solicitors sought a valuation under s 9A of the Valuation of Land Act 1916 (NSW) (VLA). Under s 9A(1) of the VLA, the Valuer-General may make a valuation of land at the request of any person for the purposes of any agreement or other arrangement between the parties that provides for the valuation to be made by the Valuer-General, subject to s 9A(4), which provides that the making of such a valuation is at the discretion of the Valuer-General. By letter dated 23 May 2025 the Valuer-General declined to make a valuation under s 9A.

26. By the summons the plaintiff seeks an order that he would be justified in administration of the estate of Gordon John Thwaite on the basis that:

27. Clause 4.1.7 of the will of Gordon John Thwaite dated 5 July 2012 is to be construed as meaning the sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite pursuant to that clause was to be a sale at a price being one half of the Valuer-General’s valuation of the whole of the property known as 54 Kalinda Road, Bar Point as was applicable at the date of the deceased’s death.

28. The sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite pursuant to clause 4.1.7 of the will which resulted in the transfer of that one half share of the property being transferred to Kim Thwaite on 19 June 2023 for consideration in the sum of $135,500 was a sale carried out in accordance with the terms of the will.

29. The executor is entitled to distribute the remainder of the estate without making any further allowance in relation to the sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite.

The plaintiff’s construction of cl 4.1.7.1

24. The executor submits that the correct construction of cl 4.1.7 is that it only required Kim (or Mark) to pay a price equal to one half of the Valuer-General’s valuation of the whole of the property as applicable at the date of the deceased’s death.

25. It was submitted that cl 4.1.7 serves three purposes. First, it deals with who has priority as purchaser of the half interest, providing that Kim has the first option, Mark has the second option if Kim does not wish to purchase, and, in the event neither brother wanted to purchase the half interest, it was to be sold to a third party. Secondly, cl 4.7.1 stipulates the valuation method for the purposes of the sale to Kim or Mark. Thirdly, cl 4.7.1 comprises a gift to Kim (or Mark if Kim does not choose to buy) by way of giving Kim ‘an opportunity to purchase the deceased’s one half share of the property at a value based upon land value only and therefore at an undervalue’.

26. The valuation method and its operation as a gift of an option, the executor submits, are closely associated. If the effect of cl 4.7.1 was to require Kim to pay the whole value of the land, this would not amount to a gift, but impose a burden on Kim (or Mark). That would not be consistent with the usual presumption of gift, being that the testator is to give something to someone by way of disposition: Estate of Fabro, deceased [1965] SASR 69 at 73; David M Haines, Construction of Wills in Australia (1st ed, 2007, LexisNexis) at [2.19].

27. With respect to the suggestion that the Valuer-General’s valuation of the whole of the property requires the option to purchase the one half share at the full value of the property because this is the only ‘figure’ stated in the Valuer-General’s valuation of the property, the executor submits that this is a construction of the will in ‘entirely literal terms’ and ‘in a strictly technical or legalistic sense’ contrary to authorities such as Muir v Winn [2009] NSWSC 857 at [23]-[24] and Ashton v Ashton [2010] QSC 326 at [14]. In the former case, Bryson AJ said at [23]:

Interpreting a will is not an exercise from the logic schools nor is it an exercise in entire purity of language. The court seeks to ascertain the intention of the testator as expressed in the language used, while understanding that the language used might not express that intention perfectly.

28. The executor submits that if the testator were intending to impose upon Kim the obligation to pay the amount of the value of the whole of the property for the one half share of the property being purchased, it would be expected that the testator would have used words to make that very clear.

Principles

29. The starting point for the construction of a will is the following statement of Viscount Simon LC in Perrin v Morgan [1943] AC 399 at 406:

…the 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.

30. In the same case, Lord Romer said at 420:

… I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. To understand the language employed the court is entitled, to use a familiar expression, to sit in the testator’s armchair. When seated there, however, the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said …

31. This fundamental principle was recently stated by White JA (with whom Gleeson JA agreed) in De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351 at [50]:

The object of construction of a will is to give effect to what can be ascertained, having regard to admissible extrinsic evidence, the testatrix intended by the words she used: Fell v Fell (1922) 31 CLR 268 at 273–274; [1922] HCA 55; Perrin v Morgan [1943] AC 399 at 406, 416. The intention of the testatrix is to be determined from the language of the will read in the light of the circumstances in which it was made. The Court is entitled to sit in the “testatrix’s armchair” to understand the language she employed: Hatzantonis v Lawrence [2003] NSWSC 914, [7] ff (Bryson J).

32. The “armchair principle” referred to in the above passages was summarised by White J (as his Honour then was) in an earlier decision, Parry v Haisma [2012] NSWSC 290 at [10] (emphasis in original):

There was no real controversy about the admissibility of extrinsic evidence for the purpose of construing the will. In Higgins v Dawson [1902] AC 1 the House of Lords said that evidence of surrounding circumstances could only be adduced where there was ambiguity (at 7, 8 and 11) and endorsed a very narrow approach to finding ambiguity (at 10). That approach is not consistent with the current approach to construction of wills (Perrin v Morgan [1943] AC 399) and was not urged in the present case. Evidence of the circumstances surrounding the testatrix was admissible to assist in the construction of the will so that the court could place itself “so to speak, in [the testatrix’s] arm-chair and consider the circumstances by which [she] was surrounded when [she] made [her] will to assist … in arriving at [her] intention” (Boyes v Cook (1880) 14 Ch D 53 at 56; Allgood v Blake (1872–73) LR 8 Exch 160 at 162). As it was put in Allgood v Blake (at 162):

“The general rule is that, in construing a will, the Court is entitled to put itself in the position of the testator, and to consider all material facts and circumstances known to the testator with reference to which he is to be taken to have used the words in the will, and then to declare what is the intention evidenced by the words used with reference to those facts and circumstances which were (or ought to have been) in the mind of the testator when he used those words. … the meaning of words varies according to the circumstances of and concerning which they are used.”

33. As part of the process of construction it is necessary to (a) give the words of the will their plain (ie. ordinary and natural) meaning but in light of the terms of the will as a whole (Fell v Fell (1922) 31 CLR 268 at 273–274; [1922] HCA 55); and (b) seek to ascertain the basic scheme which the deceased had conceived for dealing with his or her estate and then to construe the will, if possible, to give effect to that scheme (Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 at [19]).

34. It is accepted that a court can, as part of the process of construction, read words into a will where it is clear on the face of the will that words have been omitted from the will and what those omitted words are. Reading words into or “moulding” the terms of a will in these circumstances to avoid an absurd and irrational result which would otherwise arise, when the will is read as a whole, is long established: see eg. in England: Re Redfern (1877) 6 Ch D 133 at 138; Re Smith [1948] Ch 49 at 53; Re Whitrick (deceased) [1957] 1 WLR 884 at 889, 891–892; Re Doland’s Will Trusts [1970] Ch 267 at 274; in Australia: Towns v Wentworth (1858) XI Moore 526 at 543; 14 ER 794 at 800 (Privy Council); Fell v Fell supra, propositions [5]–[8]; Tatham v Huxtable (1950) 81 CLR 639 at 645 at 651–652; [1950] HCA 56; Re Whelan [1961] VR 706 at 710; In re Solomon [1946] VLR 115 at 120–121; Butlin v Butlin (1966) 113 CLR 353 at 357 and 362; [1966] HCA 4; Betts v Connolly (1970) 120 CLR 417; at 420–421, 427–429; [1970] HCA 18.

35. As noted by Romer LJ in Re Whit**rick *(*deceased) at 892, ‘it is not necessary … to know the precise language which the testatrix must be deemed to have had in mind; it is sufficient if one knows that she did intend to make a particular provision and what that particular provision was’.

36. I note also that s 32 of the Succession Act 2006 (NSW) permits the admission of extrinsic evidence to assist in the construction of a will in certain circumstances. This provides:

(1) In proceedings to construe a will, evidence (including evidence of the testator’s intention) is admissible to assist in the interpretation of the language used in the will if the language makes the will or any part of the will -

(a) meaningless, or

(b) ambiguous on the face of the will, or

(c) ambiguous in the light of the surrounding circumstances.

(2) Despite subsection (1), evidence of the testator’s intention is not admissible to establish any of the circumstances mentioned in subsection (1)(c).

(3) Despite subsection (2), nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.

Consideration

37. There are two elements of ambiguity in the expression ‘at the Valuer-General’s valuation figure at the time of my death’ in cl 4.1.7. First, does it refer to a ‘valuation figure’ for the entire property or only a half share in the property. Secondly, if the latter, how is it to be applied absent an actual valuation of the half share in the property at the time of the deceased’s death. The presence of this ambiguity means that extrinsic evidence is admissible in the construction of cl 4.1.7 under s 32 of the Succession Act, as well as under the armchair principle.

38. The construction of cl 4.1.7 is to be approached by considering first the scheme of the will, summarised earlier. It is apparent from the scheme of the will that the deceased wished to confer on Kim an option to acquire his half share in the property as a gift. In considering the nature of that gift, it is relevant that the circumstances known to the deceased at the time he made the will include that (a) Kim owned the other half share in the property which he had purchased in 2006 for $105,000, (b) the property was, apart from a ‘rudimentary shed’, unimproved land, and (c) the Valuer-General’s valuation of the property is the freehold value of the land excluding any structural improvements, being a matter disclosed in the valuation referred to at [19(1)] above.

39. From his knowledge of (b) and (c) it can be inferred that the deceased chose the Valuer-General’s ‘valuation figure’ because it would provide a method of valuation which was appropriate to the subject matter of the gift, and would avoid the expense of obtaining an independent valuation. What the deceased left understated was whether the Valuer-General’s ‘valuation figure’ would be that for the whole of the property or only the half share in the subject matter of the option.

40. It would be very odd given the deceased’s knowledge of (a) that he would have intended that Kim be required to pay an amount equal to the unimproved value of the entire property, in effect paying twice for the half share he previously acquired in 2006. Such a result would be inconsistent with the option being a gift, as it would effectively require him to pay more than the value of the half share the subject of the option. Similarly, it would be an odd result to require Mark to pay such an amount, given that cl 4.7.1 also adopts the Valuer-General’s ‘valuation figure’ as the basis for determining the price to be paid by Mark if he were to exercise the option because Kim declined to do so.

41. It would also be inconsistent with another aspect of the scheme of the will which is that the deceased wished to treat his three children in a broadly equivalent way, as they (each considered as a family group) each take one third of the residue. The purpose of cl 4.7.1 is to be seen as a method of getting into residue an amount equal, through the proxy of the Valuer-General’s ‘valuation figure’, the cash proceeds from the sale of the half share owned by the deceased whichever of his sons decided to purchase that half share, so that those cash proceeds would pass along with the remainder of his property after paying the debts and legacies into the residue to be divided equally among his three children.

42. For these reasons, in my view the first ambiguity is to be resolved on the basis that the ‘valuation figure’ is intended to be a proxy for the value of the deceased’s half share in the property.

43. As to the second ambiguity, the only valuation by the Valuer-General at the time of the deceased’s death was one stating the unimproved value of the whole of the property. As noted earlier, the Valuer-General has declined to provide a private valuation of the deceased’s half share in the property under s 9A of the VLA. Under s 20 of the VLA, the holder of an estate in fee simple land may, by notice to the Valuer-General, require the Valuer-General to make a valuation of that person’s estate or interest in the land. No valuation under s 20 was sought by either the deceased or the executor prior to the transfer of the half share in the property to Kim. Hence, while it may have been possible in the past for a valuation of the deceased’s interest in the property to have been obtained from the Valuer-General, it is no longer possible. However, it can be inferred from the facts known to the deceased at the time he made the will that he knew that there would, at the time of his death, be a valuation of the whole of the property by the Valuer-General to which reference could be made for the purpose of implementing cl 4.7.1.

44. As noted earlier, it is not necessary to know the precise language which the testator had in mind and it is sufficient if the court knows that he did intend to make a particular provision and what that particular provision was. In my view it is clear that the deceased intended to make a particular provision regarding the property under cl 4.7.1, and the content of that provision was to give his son Kim an option to purchase his half share of the property at a price equal to 50% of the Valuer-General’s most current valuation for the whole of the property at the time of his death.

45. For these reasons, the plaintiff is entitled to the relief sought in the summons.

Conclusion

46. For the above reasons, the Court will make the following orders:

47. The plaintiff is justified in administering the estate of the late Gordon John Thwaite on the basis that:

(a) Clause 4.1.7 of the will of Gordon John Thwaite dated 5 July 2012 is to be construed as meaning the sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite pursuant to that clause was to be a sale at a price being one half of the Valuer-General’s valuation of the whole of the property known as 54 Kalinda Road, Bar Point as was applicable at the date of the deceased’s death. (b) The sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite pursuant to clause 4.1.7 of the will which resulted in the transfer of that one half share of the property being transferred to Kim Thwaite on 19 June 2023 for consideration in the sum of $135,500 was a sale carried out in accordance with the terms of the will. (c) The executor is entitled to distribute the remainder of the estate without making any further allowance in relation to the sale of the deceased’s one half share in the property known as 54 Kalinda Road, Bar Point to Kim Thwaite.

2. The costs of the plaintiff of obtaining the judicial advice set out in these orders be paid out of the Estate of the late Gordon John Thwaite, calculated on an indemnity basis.

**********