White v Arizon Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5279/03 - WHITE v ARIZON PTY LTD JUDGMENT 1 HIS HONOUR: The basic questions in this litigation arise out of the will of the late Margaret Annette White, who died on 10 April 2001. By her last will bearing date 28 February 1992 the testatrix made the following provisions: "2. I APPOINT my sons JAMES ALEXANDER DAVID WHITE and JEREMY NICHOLAS JOHN WHITE my Executors. 3. I APPOINT ARIZON PTY LIMITED (ACN 054 934 280) to be the sole trustee of my Will. … 5. MY EXECUTORS shall hold the residue of my estate on trust:- (a) (i) To transfer to my Trustee my land and dwelling house situate at No 20 Painters Lane, Terrigal or such other land and dwelling house or real estate which I may have at my death ("the property") to permit my grand-daughters ISOBELLE VICTORIA WHITE and EMMA JOANNE WHITE or the survivor of them to occupy same, whether as their place of residence, continuously or otherwise, they jointly keeping the property in good repair (having regard to the condition thereof at my death) and insured in the name of my Trustee with an insurer and in a sum approved by it as being the cost of replacement of the dwelling, paying all rates and taxes levied on the property. If my Trustee is of the opinion that my said grand-daughters have ceased to occupy the property or have otherwise failed to fulfill the conditions contained in this sub-clause it may by written notice to my grand-daughters terminate their right to occupy same. (ii) On the termination of the interest contained in sub-clause (a)(i) hereof, to transfer same to such of my grandchildren who survive me and attain the age of twenty-one (21) years, and if more than one as tenants in common in equal shares. … 6. MY EXECUTORS AND MY TRUSTEE shall have the following powers:-

… (c) To sell, lease, exchange or otherwise dispose of assets in my estate on such terms as they consider expedient as though they were the absolute beneficial owners." 2 The present dispute is over the Terrigal property referred to in clause 5(a) of the will, which is the land comprised in Folio Identifier B/433631. The defendant, Arizon Pty Ltd, is registered as proprietor of this land. 3 The plaintiff, Isobelle Victoria White, has lodged caveat 9857783E against that title. The nature of the estate claimed was described as "an interest in the land pursuant to a right of residence under the last will and testament of Margaret Annette White dated 28 September 1992." It is conceded that that is an inadequate description and the plaintiff has asked me to exercise powers under s 74L of the Real Property Act 1900 to overlook a failure of the caveator to comply strictly with the requirements of the Act to describe her interest. She claims an equitable defeasible joint life interest with her sister. 4 Probate of the testatrix's will was granted to J A D and J N J White, the sons of the testatrix, by this Court in probate on 26 September 2001. As the defendant is now the registered proprietor of the land, there is no purpose in considering any possible conflict between clauses 2 and 3 of the will. 5 At all material times the testatrix's widower has continued to reside in the Terrigal property, but it appears that he is willing to vacate in the near future to enter accommodation where he will be cared for. The fact, however, that he has been residing in the property is significant because it would have been a fact that the testatrix would have known, both at the time she made her will and immediately before her death. 6 By contract made on 16 September 2003 the defendant sold or contracted to sell the Terrigal property to a Mr Felsch for $760,000 on a contract containing a forty-two day completion clause. Shortly afterwards the solicitor for the defendant caused the Registrar General to give a lapsing notice with respect to the plaintiff's caveat. The plaintiff filed a summons to extend the caveat and for a declaration as to her rights. The defendant has filed a cross-claim for possession and to recover the rates that have been paid. Those are the matters that are before me today. 7 There is in evidence a letter dated 16 October 2003 from Emma White that she has accepted the trustee's decision to terminate the right to occupy the Terrigal property and has expressed her wish that the property be sold. I infer from this that Emma White is still alive, and that seems to be common ground. Emma White did not give evidence, but it would not seem that she has ever sought to reside in the Terrigal property. 8 The persons other than the plaintiff entitled under cl 5(a)(ii) of the will are Emma White, James White junior, Malinda White and Megan White. They have filed affidavits supporting the decision to sell. 9 The evidence is that between April 2001 and February 2003 the plaintiff visited the Terrigal property at Christmas and Easter. She was working in Brisbane at this period. The plaintiff moved into the Terrigal property to live there in February 2003. She moved out in October 2003, she says under pressure from the executors because of the pending sale. 10 The plaintiff has never paid any rates on the property. She says that she had a conversation with her father, one of the executors, in which her father said, "I'm paying the rates but you have to pay me back at some stage." She said she assumed that her father was paying for all the things necessary to maintain the house, including the insurance. 11 The plaintiff's father does not agree with this. He agrees he said he was paying the rates. He says he was paying them on behalf of the defendant, not on behalf of his daughter, and that his daughter's assumption that he was doing all the necessary things to maintain the house was incorrect. He only paid council rates and water rates, not insurance, and had not paid out any other money for maintaining or preserving the property. 12 In cross-examination he agreed that he may have said, "But you'll have to pay them back" after the reference to the rates, and it is common ground that the father said to the daughter when she rang on 14 October 2003 and asked, "Are you paying all the rates and things on the house at Terrigal?" "Yes, I bloody well am." 13 As to the repair of the property, it was not in good repair at the time of the testatrix's death, but it certainly has deteriorated since. The plaintiff has never done or authorised any repairs, although at one stage she did take some steps to get a quote for painting. 14 On 17 November 2003 the solicitor for the defendant sent notices to the plaintiff and Emma White, purportedly terminating their right to occupy. As I have said, Emma concurred. The plaintiff said she never received the notice. This is explicable as she seems to have changed her address every couple of months or so during the relevant period, but she certainly saw the notice before the cross-claim was filed. Her answer to it is that the trustee would have had to come to the view that she had ceased to occupy as a decision taken with reasonable objectivity, and this could not have been the case. 15 Counsel propounded a series of questions which it was suggested I must address when deciding this case. These are:

Does the plaintiff have a caveatable interest in the property comprised in folio identifier B/433631?

Is the interest of the plaintiff that of a life tenant?

If yes, is the life tenancy subject to conditions subsequent?

If yes, has there been a failure in performance of those conditions?

If yes, does that failure entitle the trustee to determine the life estate?

If yes, has the trustee in fact terminated the life estate? 16 I will answer these questions in turn, but it seems to me that there is another vital question, which I will call question zero. That is, what is the significance of the plaintiff having a joint right with her sister Emma White and Emma not being a claimant, and indeed concurring with the actions of the defendant? I will deal with this question zero together with my consideration of questions 1 and 2, which really hang together. 17 I have already set out the provisions of the will. Mr Washington, for the plaintiff, draws specific attention to the word "occupy" in cl 5(a) and points to the decision of A H Simpson CJ in Eq in Re Keenan (1913) 30 WN (NSW) 214. His Honour there said at 215: "A direction that a person may reside or live in a house prima facie confers a personal right for a man cannot reside by deputy. But a right to use and occupy, or to occupy only, stands on a different footing for a man can 'occupy' by himself or a tenant." 18 Mr Washington then took me to the judgment of Lord Sterndale MR in Re Gibbons [1920] 1 Ch 372 at 379, where his Lordship set out the general rule that where one has a gift "to occupy and enjoy the use of … unless there be something to show that the meaning of those words is restricted, they extend to something beyond residence." 19 So then one has to actually look at the will because all exercises in will constructions are not decided by some general rule but by considering the words used by the testatrix in the circumstances in which she used them construing the will as a whole. 20 The vital part of cl 5(a)(i) is that the two sisters are given the right to occupy the Terrigal property "whether as their place of residence, continuously or otherwise". Had the gift stopped with the word "occupy" or "occupy same" then there would be a fairly strong, but not conclusive, argument that the word "occupy" was equivalent to "use and occupy", which would allow either personal residence or letting. However, the clause does not stop there but notes that the occupation is to be as their place of residence "continuously or otherwise". If it could be said that the words "or otherwise" should be read after "residence" then that would reinforce the view that the right to occupy permitted a tenancy and so was virtually the same as a life estate. However, the words "or otherwise" are used conjointly with the word "continuously" and that, to my mind, indicates that the sisters were entitled to use the property as their place of residence either for the whole year or from time to time. 21 When one takes into account that the property is at Terrigal, which might be thought to be a place where people would like to spend time during vacation periods, and when one takes into account the further consideration that the widower was living there as at the date of the will and as at the date of the testatrix's death, these parts of the factual matrix reinforce the view that the sisters only had a right of residence. 22 The fact that they were given a joint right of residence is again significant, because where there is a joint right, unless all the joint proprietors assert the right the right cannot generally be vindicated by a court. The cases on restrictive covenants such as Ellison v O'Neill (1968) 88 WN (NSW) (Pt 1) 213 make this clear. Part 8(3) of the Supreme Court Rules make joinder of the person with the joint right mandatory. Accordingly, even if the construction of the will that I have indicated is the correct one were in error, it would be difficult to see how the plaintiff's caveat could in any event succeed, or indeed how this suit could succeed without Emma White being a party. 23 It is quite clear, and if authority were needed I would cite Stevenson v Myers (1929) 47 WN (NSW) 94, 95 per Harvey CJ in Eq that "a mere right of personal residence in a house cannot be called an estate of any kind, and it is indistinguishable from a mere irrevocable licence." 24 Accordingly, I would answer questions zero, 1 and 2 as follows:

2. No. 25 Accordingly, 3 does not arise. 26 Question 4 deals with whether there has been failure in the performance of the conditions. The answer to this must be certainly "yes". The conditions require that the persons occupying the property as their place of residence are to keep the property in good repair and to insure it and to pay all rates and taxes. The clear evidence is that the plaintiff has never paid the rates, she never insured the house, and she has done nothing to maintain it. The mere fact that the plaintiff knew her father had paid the rates and might have expected her to repay him does not constitute payment of the rates. The answer that the trustee has never requested that to happen is no answer, nor is her view that her father has fulfilled the condition for her. 27 The next question is whether that failure enabled the trustee to determine the life estate. In view of the closing words of cl 5(a)(i), it is not necessary to deal with the awkward question as to whether failure to comply with the conditions is a condition subsequent of failure or the sort of condition referred to by this court in Gill v Gill (1921) 21 SR (NSW) 400. The probability is that it is a Gill v Gill condition and this seems to be an approach that Wheeler J made in her judgment in Perpetual Trustees (WA) Ltd v Darvell [2001] WASC 123 at para [7]. 28 The trustee clearly was of the required opinion. The material before the court suggests that there was clear material on which they could form that opinion and, they having formed that opinion, any right which the plaintiff had was determined. 29 Question 6 really raises the same point. It does not seem to me to be material that the plaintiff may not have received the formal letter until shortly before the cross-claim was filed. Accordingly, the plaintiff's summons must be dismissed with costs. 30 On the cross-claim, declaration 1 should be made, that is, that any interest of the plaintiff in the Terrigal land has been terminated. The cross-claim also sought an order for possession which does not now seem to be necessary as the plaintiff has physically vacated. There was also sought a declaration that the plaintiff is indebted to the defendant in the sum of $6798.78, which is the amount of the rates. I have had a little bit of doubt about that, but seeing as no claim has been made for damages for putting on the caveat and seeing that the rates were paid by Mr Jeremy White on behalf of the company, I think the cross-claimant is entitled to that order. 31 I make declaration 1 in the cross-claim. 32 I make order 2, that is, judgment for the cross-claimant in the sum of $6798.78 plus interest to date. 33 I order that the plaintiff pay the costs of the claim and the cross-claim. I order that the plaintiff remove caveat 9857783E by 10 am on 7 November 2003.

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