Catholic Parish of St Brigid Marrickville v Habib as Executor of the Estate of the late Tereza Efram

Terza (Tereza) Efram died on 22 June 2018, leaving a will made on 6 September 2001. After appointing the defendant, George Habib, as the executor and trustee of her will the testatrix (in clause 3) gave the plaintiff, the Catholic Parish of St Brigid at Marrickville (‘St Brigid’s’), “my principal place of residence and all furnishings but subject to any mortgage which may be registered against the said property at the date of my death”. When she made her will in 2001 the testatrix owned and lived in a residential property in Marrickville.

From April 2010 until testatrix’s death the New South Wales Trustee and Guardian (‘TAG’) had managed her financial affairs under the NSW Trustee and Guardian Act 2009 (‘TAG Act’). In June 2010 the testatrix moved from her Marrickville property into a care facility and did not return to it before her death. In 2011 the TAG sold the testatrix’s Marrickville property and held the proceeds on trust for her. The proceeds can still be identified. Mr Habib took a grant of probate of the will in November 2020.

By its summons the plaintiff, St Brigid’s, seeks a declaration that the testatrix’s gift of the Marrickville property to the plaintiff is not adeemed and is valid by reason of the operation of TAG Act, s 83. If successful, St Brigid’s will be entitled to the identifiable balance of the proceeds of sale of the Marrickville property.

By his cross-claim, the executor, seeks judicial advice as to whether he is justified in distributing the testatrix’s estate on the basis that the clause 3 gift of the Marrickville property to St Brigid’s fails and falls into the residue of the testatrix’s estate.

The executor further proposes that orders be made on the basis that the residuary beneficiaries named in the will and any next of kin of the testatrix for the purposes of Succession Act 2006, Ch 4 did not survive her. He seeks an additional order in the form of a Benjamin order, that the residue of the testatrix’s estate be distributed to the Crown as bona vacantia but without prejudice to the rights of any person to trace their share into the hands of the Crown, if it be later established that they had survived the testatrix. The Attorney-General for NSW is named as the Cross-Defendant. The Attorney-General put on the submitting appearance.

The proceedings were heard on 11 March 2022 and were relisted for supplementary submissions on 7 July 2022. In May 2022 the Court notified the parties that the Court’s own research had identified an additional case not referred to by the parties in their submissions, Walsh v Adrian Sloan as executor of the estate of the late Loretta Dorothy Keddie [2019] WASCA 107 (‘Walsh’), which is relevant to the proper construction of the words “principal place of residence”.

Ms M. Tibbey of counsel, instructed by Mr D. Eid of Danny Eid Lawyers appeared for St Brigid’s. Ms P. Muscat of counsel, instructed by Mr D. Shad of Shad Partners appeared for the executor.

The executor did not actively resist the application brought by St Brigid’s. The executor took the view that he was the proper contradictor in the proceedings and assisted the court by advancing all relevant arguments to the Court to assist the Court to make a determination: Vasiljev v Public Trustee [1974] 2 NSWLR 497 at 503-504. Ms Muscat of counsel and those that instructed her fulfilled this function appropriately by advancing arguments against those put on behalf of St Brigid’s. The Court has been much assisted by the exchange of submissions between the parties.

The testatrix did not marry and had no children. The Court has limited information about her background. But it is known that she was born in Beirut in Lebanon in 1938, migrated to Australia in the early 1970s and became an Australian citizen in 1976. She worked for a long time in an aluminium fabrication factory in West Marrickville.

In 1985, the testatrix purchased the Marrickville property in Porter Avenue Marrickville. In about 1974 she became very close friends with Leila and Saad Chemouni, who lived in Porter Avenue. The testatrix regularly visited Leila and Saad Chemouni in Porter Avenue between 1974 and 1985. The testatrix decided to purchase a house near them in Porter Avenue and announced to them her decision to do so. The testatrix was then in her mid-forties. She moved into a residence less than 10 houses from the Chemouni’s house in Porter Avenue. The Chemounis remained very close to the testatrix until her death. Leila Chemouni acted as the emergency point of contact for the testatrix for many years and was listed as the informant on the testatrix’s death certificate. During the 1980s and 1990s, the testatrix found great fulfilment in her relationship with Leila and Saad Chemouni and their four children.

The testatrix was a regular weekly and sometimes daily communicant at St Brigid’s, which was only a short walk from the Marrickville property. She was devoted to her religious practice and had dedicated a room in the Marrickville property to the Catholic religion, which was adorned like an informal shrine with religious statues, candles, and pictures of spiritual significance to her.

In the early 1990s the May Murray Neighbourhood Centre, in Marrickville conducted a community care program assisting the elderly and others requiring care with the local community. The May Murray Centre provided meals, transport, medical assistance, cleaning, nursing, and other general services from the early 1990s. Due to declining health the testatrix availed herself of the May Murray Centre’s services.

The testatrix met the executor, Mr Habib through her contact with the May Murray Centre. In the early 1990s he was the coordinator of the centre’s home and community care program and was in regular contact with the testatrix in relation to the services provided to her. Sometimes Mr Habib, or other staff from the May Murray Centre would drive the testatrix to St Brigid’s. Mr Habib remained the program coordinator for the May Murray Centre right through until 2010, when the centre ceased providing services to the testatrix upon her moving into a care facility.

Leila Chemouni noticed in about 1998 that the testatrix was beginning to display increasingly unusual behaviours, that appeared to indicate fluctuations in her mental wellbeing. At times she had paranoid ideation but at other times she seemed quite well. Her situation was managed for a long time through the goodwill, support and friendship principally of Leila and Saad Chemouni and the May Murray Centre. Leila and Saad Chemouni welcomed her into their home on many evenings, when she was fearful or felt vulnerable. And she was welcomed into the Chemouni family at Christmas, Easter, on Mother’s Day, family birthdays and on many other special family occasions.

For over 11 years from 1998 till 2009 the testatrix managed in the community largely because of the remarkable generosity of Leila Chemouni and her family, who continued to look after her despite her increasingly erratic behaviour. Leila Chemouni realised that the testatrix had no other close relatives in Australia and that the Chemouni family were her closest friends. At considerable personal and financial cost to themselves, the Chemouni family provided her with the necessities of life, including food and clothing and offered her accommodation at their home when she needed it. Because of declining health during this decade, the testatrix was unable to manage her own personal affairs satisfactorily and reliably without such assistance.

It appears from the evidence before the Court that Leila Chemouni has sought reimbursement from the estate for some of what she provided to the testatrix. The Court is not called upon to decide this question but would observe that, subject to appropriate evidentiary proof and resolution of issues concerning the statute of limitations, her claim for reimbursement fits into a well-recognised head of claim in restitution: the conferring of benefits in the nature of necessities in-kind upon persons, who lack full legal capacity: see for example Re-Rhodes (1890) 44 Ch D 94 and Nash v Inman [1908] 2 KB 1 and the discussion in P Birks, An Introduction to the Law of Restitution (Clarendon Press Oxford, 1988) at 120-2, 433-5.

But ultimately informal community assistance was not enough. Shortly after Christmas in 2009, due to a further deterioration in the testatrix’s mental well-being she was hospitalised in the Jara Ward of the Concord Centre for Mental Health where she was managed for several months.

On 1 April 2010, the Guardianship Tribunal, now the NCAT Guardianship Division, made a Financial Management Order committing the testatrix’s estate to the TAG’s management and she became a “managed person” for the purposes of the TAG Act. It is not in contest that from the date the testatrix did not have capacity to manage her own affairs and estate, and that the authority to do so was vested in TAG.

On 21 June 2010 the testatrix entered permanent care at Uniting Locke Haven in Petersham, where she remained until approximately 5 April 2011, when she transferred into permanent care at Uniting Illowra, Waverley.

By mid-2011 it was clear that the testatrix was unlikely to return to live in the Marrickville property. The TAG decided to sell it. The sale price was $710,000. The sale settled on 31 October 2011 and the proceeds on settlement of $637,787.16, together with the balance of $57,078 after deduction of commissions from the deposit $70,000, were paid to the TAG.

These funds were paid into the testatrix’s TAG account on various dates after 1 November 2011. As of 31 October 2011, the balance of the deceased’s TAG account was $1,359.79. This appears to have been the balance of monies available from her Centrelink pension.

Whilst under the TAG’s management the testatrix’s only regular income was from a Centrelink pension. A small amount of interest on her account balance accrued to her account from time to time.

Other funds were credited to the testatrix’s TAG account. The TAG withdrew small amounts from accounts ending 335 and 988 at the Commonwealth Bank of Australia (“CBA”) in the testatrix’s name, totalling $10,945.70 and deposited them to her TAG account. The TAG also realised the following: cash discovered at the Marrickville property totalling $2,950.75, a Telstra refund of $26.77, a refund of $140.07 from Marsh Pty Ltd, and the proceeds of sale of the testatrix’s household furniture realising $695.61.

After the TAG received the sale proceeds of the Marrickville property, on 16 November 2011, the picture emerges of the TAG quarantining a substantial portion of the proceeds into fixed deposits, and then occasionally withdrawing funds from those fixed deposits to make up a shortfall in the funds needed for the testatrix’s current account, because her Centrelink pension was insufficient to cover all her regular outgoings. This had the result that the proceeds of sale of the Marrickville property can still be clearly identified as the monies held on fixed deposit and realised after her death from fixed deposit and paid to the solicitors for the executor. An overview of the main transactions is as follows.

On 16 November 2011, shortly after receiving the proceeds of sale of the Marrickville property, the TAG drew out funds from the testatrix’s TAG account and placed $370,000.00 on fixed deposit. On 24 November 2011, the TAG also paid from the testatrix’s TAG account an accommodation bond and accommodation fees totalling $269,423.91 to UnitingCare Aging – Sydney Region to pay for her accommodation at Uniting Illowra, Waverley. Once these funds were applied in this manner the sum of $48,168.45 was left as the net balance of the TAG account. The TAG left invested the balance of the sale proceeds into her account managed by the TAG.

This account balance in the TAG account was topped up regularly by the testatrix’s Centrelink pension and debited from time to time to meet the testatrix’s medical, pharmaceutical and personal expenses. By 3 May 2012 after meeting these expenses from her pension the balance of the testatrix’s TAG account was $45,839.92.

The testatrix remained at Uniting Illowra, Waverley until 26 April 2012, when she moved to Wallgrove Aged Care at Lakemba. Her accommodation bond, in the amount of $241,750.48, was refunded by UnitingCare Aging to the TAG and paid into the testatrix’s TAG account on 4 May 2012 and the sum of $245,000 was placed on fixed deposit on 16 May 2012. This amount of $241,750.48 is merely a refund of the original deposit which was from the proceeds of sale of the Marrickville property. The sum of $3,249.52 was added to the refunded accommodation bond to make up a round number to go into a fixed deposit investment for the testatrix. Shortly afterwards UnitingCare Aging refunded an additional amount of $1,599.72 on account of a refund of fees in relation to the testatrix’s accommodation at Uniting Illowra, Waverley but this seems to have been expended on recurrent expenditure out of the TAG account.

Thereafter, the TAG regularly paid from the testatrix’s account for her accommodation and care at Wallgrove Aged Care, which did not require an accommodation bond from the testatrix but merely charged ongoing accommodation fees and expenses, which were probably higher because of the failure to pay an accommodation bond.

The TAG continued to meet the testatrix’s various day-to-day expenses at Wallgrove Aged Care from her account. From time to time, the TAG redeemed funds placed on longer term investment to top up the balance of liquid funds in her TAG account and to supplement her pension, which remained insufficient to cover all her day-to-day expenses at Wallgrove Aged Care.

The testatrix remained at Wallgrove Aged Care until she died on 22 June 2018. When she died her TAG account balance was $25,796.31. The TAG paid her funeral expenses from her TAG account and in August 2018 redeemed the testatrix’s remaining invested funds on fixed deposit in the sum of $535,660.46 (comprised the two deposits originally made with accumulated interest, being $312,739.97 and $222,920.49). Before those fixed deposits were redeemed and paid into the testatrix’s TAG account the account balance was only $1,223.82. After the fixed deposits were paid into the account, four amounts of interest totalling approximately $20,000 on the then substantial balance of the TAG account were paid into the TAG account on a half yearly basis.

On 13 October 2020, the TAG paid the then balance of $554,515.01 of the funds held on behalf of the testatrix in the TAG account to the solicitors acting for the executor, Shad Partners. But for two relatively minor amounts, this sum of $554,515.01 represents the identifiable proceeds of sale of the Marrickville property, which have been held continuously on fixed deposit, together with compound interest on those funds between 2012 and 2020. The two minor amounts are the sum of $3,249.52 used to make up the amount of $245,000 which was invested in a fixed deposit when the accommodation bond was repaid in 2012 and the sum of $1,223.82 that was in the testatrix’s TAG account immediately before the fixed deposits were redeemed in August 2018.

Apart from these funds, because of the constant turnover in the testatrix’s TAG account, no other funds in that account represent the residue of the proceeds of sale of the Marrickville property.

But the amount of $554,515.01 paid to Shad Partners must be reduced to account for the costs of these proceedings. As at the date of the hearing, the executor’s lawyers, Shad Partners estimate that the net distributable estate will be in the order of $500,000.00 after accounting for the payment of the executor’s costs and disbursements of the proceedings on the indemnity basis. Due to the deduction of these legal fees, it is unlikely that the two relatively minor amounts indicated above will need to be brought to account in ascertaining the identifiable proceeds of sale of the Marrickville property. Should for some reason the executor need to seek directions or judicial advice about ascertaining the precise amount of the proceeds of sale, he will have liberty to apply for two months.

The testatrix retained solicitors to make the will, which she executed on 6 September 2001. Leila Chemouni believes that she took the testatrix to the solicitors to make the will. The time she made the will the testatrix was about 64. Partly because the will was made with the intervention of solicitors, partly because the testatrix’s mental state would often be quite sound and partly because of the inherent rationality of the will, no issue is raised about its validity.

The will states that it is the last will of the testatrix, whose address is given as Porter Avenue Marrickville. Clauses 1 and 2 of the will revoke previous testamentary dispositions and appointed Mr Habib as the executor. Clause 3 of the will contains the provision of present relevance and clause 4 disposed of the testatrix’s residuary estate among identified relatives as follows:

The executor has undertaken detailed enquiries from the solicitors that the testatrix retained to make her will. But no will file or record of relevant will instructions could be located.

The executor’s cross-claim raises seeks judicial advice and other relief upon the basis that the gift in clause 3 fails. The executor has adduced evidence of the difficulty in locating the relatives of the testatrix referred to in clause 4. After what the executor claims has been due search and inquiry, he contends that none of these relatives can presently be found. The executor seeks alternative relief if the clause 3 gift fails, either that the balance of the estate be distributed to the Crown as bona vacantia, or that the Court give directions for an enquiry as to what persons, including the testatrix’s next of kin, are entitled to succeed to the residue of her estate.

It is not in dispute that the testatrix owned the Marrickville property and resided there at the time the will was executed. The address of the Marrickville property is recorded as the testatrix’s address on the face of the Will.

The parties did not dispute that the Marrickville property was the testatrix’s “principal place of residence” at the time she made the will.

The Guardianship Tribunal (now Guardianship Division of NCAT) made the financial management order on 1 April 2010 under Guardianship Act 1987, s 25E (‘Guardianship Act’), whereby the TAG was appointed to manage the whole of the testatrix’s estate. Guardianship Act, s 25G required the Tribunal to be satisfied at the time of the order that the testatrix was not capable of managing her own affairs, that there was a need for another person to manage those affairs on her behalf and that it was in her best interests that the order be made. Once the financial management order was made the testatrix’s power to deal with the whole of her estate was suspended: TAG Act, s 71.

A new legal environment was created for the testatrix once the financial management order was made. Relevant parts of that environment may be briefly summarised. The Court of Appeal in RL v NSW Trustee and Guardian (2012) 84 NSWLR 263; [2012] NSWCA 39 [39] to [48], set out in detail the applicable provisions of the TAG Act, ch 4 (particularly pt 4.5), which govern the management of the estates of persons, such as the testatrix, who are the subject of financial management orders.

The following are other relevant provisions of TAG Act, Ch 4. A “managed person” is defined as “a protected person…whose estate is subject to management under this Act” and “a protected person” is a person with an order in force under the Guardianship Act “that the whole or any part of the person’s estate be subject to management under the TAG Act”: TAG Act, s 38. The welfare and interests of managed persons should be given paramount consideration: TAG Act, s 39. The TAG has all the functions of the managed person and may apply the estate of the managed person to a wide range of purposes: TAG Act ss 57 and 59.

In TAG Act, pt 4.5, div 3 (‘management of estates generally’), provision is made for a range of general matters concerning the estates of managed persons. Included among those general matters are TAG Act, ss 82 and 83.

TAG Act, s 82 provides as follows:

TAG Act, s 83 provides as follows:

As RL explains (RL at [66] to [90]), s 83 has a lengthy legislative history commencing with an English Act of 1830, amendments to which were mirrored in NSW legislation from 1834. It is not necessary to reproduce that history in these reasons, which is fully explained in RL. Prior to the enactment of the English legislation of 1830, if an asset of an incapable person under the protection of the Lord Chancellor in his jurisdiction in lunacy was sold or converted into a different type of property under proper legal authority, then upon the death of the person the assets devolved in accordance with the form they had at the date of death. A particular application of that principle was that if the Court authorised the sale of an item of property that had been the subject of a specific legacy or a specific devise in the person’s last will before losing capacity, the gift was adeemed. This followed because the Court’s authorisation of the sale or conversion of the property was treated as though it was the act of the testator himself. But a specific legacy or devise was not adeemed, if the property that was its subject matter was sold or otherwise disposed of without the testator’s authority.

Several principles in the administration of the property of incapable person were important background to the enactment of the English legislation of 1830. The first of these was that the Court of Chancery would always seek to provide, including by the sale of assets, that the incapable person should have every comfort without any thought of keeping property for the benefit of next of kin or other expectants. And the second was that the Court would not vary or change the property of incapable person or alter rights of succession to property beyond what was necessary for the maintenance of the incapable person.

The purpose of the English legislation of 1830 and its successor legislation in England and in New South Wales was to “to protect specific gifts and to prevent ademption of them”: In re Walker [1921] 2 Ch 63 (‘Walker’) at 66 and RL at [78]. The English Act of 1830 empowered the raising of money to certain specified purposes for the benefit of the incapable person by the sale of assets in the person’s estate. The English Act of 1830 conferred the rights in the “surplus” that remained after meeting those purposes on a range of people including the incapable person and that person’s executors and next of kin. But that surplus could be eroded during the life of the incapable person. The legislation serve the purpose of ensuring that the incapable person’s needs were met, if necessary by the sale of assets, without raising a concern about the interests of the next of kin or other expectants.

RL recognises (at [150]) that TAG Act, s 83 operates to serve the same objectives as the English Act of 1830. But its language and that of its immediate predecessor in this State, the Protected Estates Act 1983, s 48, are slightly different from the English Act of 1830. The Protected Estates Act 1983, s 48 and TAG Act, s 83 have been interpreted in a limited number of case cases in NSW, namely, Christensen v McKnight (Supreme Court, Hodgson J, 2 March 1995, unreported), RL, and DJ Singh v DH Singh and Ors [2018] NSWCA 30 (“Singh”). These cases have not fully explored the extent to which the somewhat different language of TAG Act, s 83 might justify a broader operation of the provision than the English legislation.

The issue raised in this case is whether clause 3 of the will is a specific gift, whether it is adeemed in the circumstances that have occurred and if it is adeemed, whether it is saved from the consequences of ademption by TAG Act s 83. To examine those issues these reasons now turn to the submissions of the parties.

The Court has found the submissions that Ms Tibbey put on behalf of St Brigid’s to be a persuasive analysis of the proper construction of the gift in clause 3 of the will and the application of TAG Act, s 83. The Court’s approach in these reasons is to set out the executor’s submissions and then to give the Court’s own analysis of issues, drawing upon the submissions put on behalf of St Brigid’s.

The executor’s submissions dealt first with the construction of the will and then with the potential application of TAG Act, s 83 to validate what the executor says is an invalid gift. The executor argued that clause 3 was deliberately drafted in generic terms to apply to any residence that the testatrix might own at the time of her death. The executor’s pre-trial written submissions concisely stated the executor’s argument in relation to the proper construction of clause 3 in the following way.

Having reached this conclusion, the executor’s submissions then contended as follows that because clause 3 did not make a specific gift it was not capable of ademption and that TAG Act, s 83 could not be applied to save it. After setting out TAG Act, ss 83(1)-(2) the executor put his argument in the following way:

Finally, Ms Muscat for the executor submits that there does not appear in this case to be any recourse available to the plaintiff to other remedies to avoid this conclusion. The executor submits that the will cannot be rectified because there is no evidence concerning the testatrix’s instructions for the will. The executor also submits that an application to add or supply words to the will would not be successful because the clearly intended meaning of clause 3 is to afford flexibility in its application.

In response Ms Tibbey submits the following: that several features of clause 3 and the surrounding circumstances demonstrate that clause 3 is a specific gift of the Marrickville property to St Brigid’s; that but for the operation of TAG Act, s 83 the gift would be adeemed; that TAG Act, s 83: saves the gift and allows what is an identifiable surplus of money in the testatrix’s estate to be applied as if it were the Marrickville property.

The Court’s construction of clause 3 of the testatrix’s will and of the operation of TAG Act, s 83 accept the substance of the submissions that Ms Tibbey put on behalf of St Brigid’s. The Court has incorporated those submissions into the Court’s reasoning below and has not set them out separately.

The issues raised by the parties for decision can be posed in the form of two main questions as follows:

These reasons will deal with each of these questions in turn.

The first question is whether the gift in clause 3 of the will is a specific gift, or a general gift; and if it is a specific gift, would it be adeemed by the sale of the Marrickville property but for the operation of TAG Act, s 83? But the first consideration is the proper approach to the construction of clause 3 and the date at which the will speaks.

The Construction of Clause 3 – Some General Principles. The Court should apply the established principles of construction of wills stated by Isaacs J in Fell v Fell (1922) 31 CLR 268 at 273–4 (“Fell”). The first two of these are: that the meaning must be discovered from the writing of the will itself “aided only by such extrinsic evidence as is necessary in order to enable us to understand the words which the testator has used”; and, that the instrument must receive a construction according to the plain meaning of the words looking at the whole instrument: see also the authorities set out in Hatzantonis v Lawrence [2003] NSWSC 914 at [6]–[10].

Expanding on the nature of the extrinsic evidence to which the Court may have regard, it is also uncontroversial that what is sometimes called the “armchair principle” may be applied in the construction of the will. Under that principle the Court may ascertain all the facts known to the testator at the time the will was made to place itself in the testator’s position to ascertain the meaning and application of the language in the will as the testator would have understood it: Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60 at 65.

The task of construction involves moulding the language of the testatrix to carry into effect as far as possible the intention which she has, on the whole will, sufficiently declared: Brennan v Permanent Trustee Company of New South Wales (1945) 73 CLR 404 at 414.

A will should not be construed in a strictly technical or legalistic sense and the construction should be sensitive to the factual context of ordinary life and circumstances: Re Willis [1996] 2 Qd R 664 (‘Willis’) at 667.

The Correct Question. Ms Muscat for the executor submits that in categorising the devise the correct starting point is Succession Act 2006, s 30. Ms Tibbey submits for St Brigid’s that the process of categorisation begins with the intention of the testatrix using the principles in Fell. The Court prefers Ms Tibbey’s submissions on this issue.

The central words to be construed in the clause 3 gift are “my principal place of residence”. Citing Succession Act 2005 (‘Succession Act’), s 30, the executor says that the will takes effect with respect to the property disposed of by the will, at the testatrix’s date of death. Succession Act, s 30, a provision which was originally enacted as the English Wills Act 1837 (‘Wills Act’), s 24, provides as follows.

The executor submits that for the will to speak at the date of the testatrix’s death the Court should ask where the testatrix was living at the time she died. The executor further submits that as the answer to that question is Wallgrove Aged Care, that must be her “principal place of residence” if the will speaks at the time she died. The executor concludes that because she did not have an interest in any property at Wallgrove Aged Care, the gift therefore fails.

But the executor’s submissions are not persuasive. When construing a Will containing the expression “my principal place of residence”, where the testator has moved into an aged care facility on an involuntary basis, the correct approach is illustrated by the analysis of the Court of Appeal in Western Australia in Walsh,.

In Walsh the Court construed a will made in January 2005 in which a testatrix had made a gift of “my motor vehicle, my household chattels and my principal place of residence at my death to my friend Diana Elaine Davies of 83 Drabble Road Scarborough in the State of Western Australia.” In Walsh at the time of making her will it was not contested that the testatrix was living with Diana Elaine Davies at 83 Drabble Road Scarborough and had done so for over 20 years. Shortly after the will was made in 2005 the testatrix sold the Drabble Road property and purchased another property in a street known as Kilpa Court, where she and Ms Davies continued to live together. In 2011 Ms Davies was admitted to an aged care facility and in 2012 due to the testatrix’s deteriorating health, she followed Ms Davies into the same aged care facility, where she died in 2015, without having sold the Kilpa Court property.

Rejecting the contention that the gift failed because testatrix and Ms Davies were no longer living in the Kilpa Court property, the Court in Walsh (at [31] and [32]), identified what it saw as the correct question. The Court explained that it was not engaged on the exercise of asking the abstract question “what is a person’s principal place of residence?”, as might arise under a taxation statute. Rather the Court’s task in construing the words “my principal place of residence” in the gift in Walsh, was to ascertain “what is the thing (if any) that the testator, by the words used in the will, expressed an intention to give?”.

That is the starting point in attempting to construe the testatrix’s will here.

The Date at which the Will Speaks. The armchair principle of construction, by which the Court places itself in the position of the testatrix at the time of execution, does not contradict Succession Act, s 30. But this principle of construction does not mean that a will only speaks as at the day of its execution. Succession Act, s 30 requires the will to speak and takes effect at the date of the testatrix’s death.

The interaction between these two principles can result in a degree of artificiality as Dixon CJ explained in McBride v Hudson (1962) 107 CLR 604 (“McBride”) in one judgment of the plurality (Dixon CJ, Taylor J and Windeyer J, McTiernan J dissenting). In McBride, Dixon CJ reviewed the origins of statutory provisions such as Succession Act, s 30 that are based on English Wills Act 1837, s 24. McBride concerned the will of a testator in which he gave his wife a gift of “196 shares in Elder Smith & Co Ltd”. The description of the 196 shares was not qualified by the word “my”. This gift was followed in the testator’s will by a clause containing bequests of various pecuniary legacies and then by another clause disposing of the whole of the residue of the estate.

At the time he made the will the testator held 196 shares of £10 each in Elder Smith & Co Ltd with paid up capital to £6 each. But before his death the capital of that company was redivided, and the shares of the testator were split into 1960 shares of £1 each paid to 12 shillings. The question in McBride was whether the widow was entitled to the 1960 shares or whether the gift failed and fell into residue. The majority in McBride concluded that the gift of the shares was a specific bequest and was not affected by the alteration in their number and value. It was necessary for the High Court in McBride to examine the South Australian equivalent of Succession Act, s 30, (Wills Act 1936 (SA), s 27), the distinction between specific and general gifts and the application of that distinction to the testator’s gift in McBride.

Dixon CJ explained in McBride the successor provision to the Wills Act, s 24. The purpose of the Wills Act provision was to align the rules for the devolution of personal property and real property by will. Prior to the Wills Act reform, the ordinary rules governing the interpretation of wills allowed the disposition by will of personal property which had been acquired after the making of the will but before the death of the testator. But devises of real property stood in a very different position; a fee simple acquired after the date of the will could not be carried by devise contained in the will.

The Wills Act reformed the law relating to dispositions of realty by will, by bringing real and personal property under an identical rule. But it did so by an “artificial recourse” (the words of Dixon CJ in McBride at 615) to the death of the testator, as a point of time at which the will shall be construed.

That artificiality can produce problems in construction, as Dixon CJ explained in McBride (at 615):

Dixon CJ then refers (at 615) to a choice that must be made between two constructions of Wills Act, s 24 which was explained in Jarman on Wills (2nd ed, 1855) at 271. Dixon CJ quoted Jarman’s explanation of the two possible constructions, which are:

Dixon CJ then continued, saying that the distinction did not appear to have been taken up judicially and examined or applied in all the time since the passing of the Wills Act but if it represents the law, it would bear upon the bequest being considered in McBride. Dixon CJ continued:

In Pohlner v Pfeiffer (1964) 112 CLR 52 at 77 (“Pohlner”) Windeyer J also accepted as correct the passage from Jarman that Dixon CJ approved in McBride.

The Western Australian Court of Appeal in Walsh addressed the process of “transferring” the will to the date of the death. Walsh explained that over time the meaning of a clause in a will does not change, but as, owing to events following the execution of the will those words may come to denote different property. The Court of Appeal said in Walsh at [28] and [29] in relation to s 26 of the Wills Act (Western Australia), the equivalent of Succession Act, s 30:

The analysis later in these reasons demonstrates that in the present case at the time the testatrix executed her will, clause 3 referred to the Marrickville property, the only real estate that she then owned and in which she was then living. But the issue in this case arises when, to use the process described by Dixon CJ in McBride, when the will so applied (that is to see to what property the words of the will refer) is transferred to the date of death of the testator by the application of Succession Act, s 30. That in turn raises questions about whether clause 3 is to be characterised as a specific or a general gift.

Specific or General Gift – Principles. Both Dixon CJ and Windeyer J in McBride set out the principles that distinguish specific from general gifts in wills. Dixon CJ said (at 616):

Then Dixon CJ defined (at 617) the differences between a specific and general bequest, citing the decision of Joyce J in In re Evans; Evans v Powell [1909] 1 Ch 784 at 786 (“Evans”):

A theme of this passage is that one feature of a specific gift is its separation from residue for the purpose of bequeathing it as a distinct subject of testamentary disposition.

In Pohlner (at 78) Windeyer J also referred with approval to the same “oft cited” passage from the judgment of Joyce J in Evans. And in Pohlner (at 78) Windeyer J also referred with approval to the decision of Harvey J in this Court in Brown v Butcher (1922) 22 SR (NSW) 176 at 183-4 and added his own further comment to the statement of Harvey J.

And both Dixon CJ (at 618) and Windeyer J (at 630) in McBride and Windeyer J in Pohlner referred with approval to Rigby LJ’s practical observation on this subject of in Re Nottage; Jones v Palmer (No. 2) [1895] 2 Ch 657, where his Lordship said, “you have got a long way towards a specific gift, if you come to the conclusion that he is trying to describe something which he has”. The testatrix’s will in the circumstances it was executed here contain strong indications that in clause 3 she was describing something that she then owned, namely the Marrickville property.

Specific or General Gift – Application of Principle. Looked at in the abstract and away from their context, the core words in clause 3, “principal place of residence” are sufficiently general in nature that they could describe any residence (other than the Marrickville property) which the testatrix might occupy at the time of her death. But when the will is considered as a whole and in the context it was made, the Court concludes that at the time of execution of her will the testatrix was identifying the Marrickville property in clause 3 and was not contemplating any change in her residency from the Marrickville property before her death. This is so for several reasons.

First, the testatrix uses the composite expression “my principal place of residence”, a clear indication she is describing real property that she then owns. The word “my” does more than just connect the testator with the place of her accommodation. In clause 3, “my” also implies ownership of that place and the use of “my” can provide a descriptive tie to a particular thing: McBride at 616. At the time of execution of the will the testatrix owned the Marrickville property, which not only was her “principal” place of residence, it was the only real estate that she owned. And “my principal place of residence” could readily be identified from the testatrix’s address in Porter Avenue Marrickville, given at the beginning of the will.

The addition of the word “my” before the description of a thing can in context indicate that the testatrix is referring to a particular thing and is intending to give that particular thing then in her possession and no other: In re Sikes; Moxon v Crossley (1927) 1 Ch 364 (“Sikes”). In Sikes a bequest of “my piano” by a testatrix, who at the date of her will was in possession of a piano which she afterwards sold would not pass a piano subsequently acquired and in her possession at the time of her death, the expression “my piano” being a sufficient indication of a contrary intention within the meaning of Wills Act, s 24.

Second, testamentary provisions using the phrase “my principal place of residence”, often do so using the additional words “at the date of my death”, thereby expressly connoting a property which may be owned by a testator at a specific future time, and which will denote a specific property upon the death of the testator. But clause 3 does not do that. Rather it contemplates the possibility of change, not of the Marrickville property as the principal place of residence but change to certain characteristics of the Marrickville property. The presently relevant text of the words of clause 3 are, “my principal place of residence and all furnishings but subject to any mortgage which may be registered against the said property at the date of my death” (emphasis added). The words “at the date of my death” here qualify “any mortgage which may be registered”. They are separated by the conjunction “but” from the words “my principal place of residence” and do not qualify those words. The crafting of these words shows that the testatrix contemplated that her intention was to continue to hold “the said property”, her present residence at Porter Avenue, but that she may have to mortgage that property before her death. This construction is reinforced by the words “the said property” after the conjunction “but”. This is a reference back to the same property, the Marrickville property, that is referred to earlier in the clause. This factor is strongly consistent with what may be inferred from surrounding circumstances known to the testator at the time of execution of her will.

Third, the known surrounding circumstances strongly support this construction of clause 3 of the will. The testatrix was not only not contemplating a possible change in her principal place of residence when she made her will in 2001 but was likely to hold the opposite intention: that she would not sell the Marrickville property.

Several matters show this. She had chosen to acquire the Marrickville property because it was only a few doors down Porter Avenue from her close friends Leila and Saad Chamouni and their family. It can readily be inferred that she was unlikely to wish to move away from the Chamouni family in Porter Avenue as she grew older and was more likely to require support. The testatrix was 64 years old and was already showing some signs of ill health, making her aware that moving house would be more difficult for her in future. Moreover, she had a profound connection to her local church St Brigid’s and lived within its parish. The Marrickville property was only a few minutes’ walk from St Brigid’s. Moreover, gifting this particular property, which was close to St Brigid’s, may have been of value to the ministry of St Brigid’s.

Fourth, the structure of the will supports the same conclusion. In McBride, Dixon CJ gave weight to the structure of the will that favoured a specific gift even though he acknowledged that the testator had not referred to “my” 196 shares, and that “there is a traditional leaning to construing a bequest as a general legacy and not a specific legacy”. Dixon CJ was in no doubt that it was to the 196 shares that the testator then held to which the testator was referring for several reasons: the bequest was among other specific bequests and the testator then went on to speak of “the whole of the residue” of his estate. If the legacy was a general legacy, it made no sense to speak of “the whole of” the residue of the estate because the general legacy would come out of what would otherwise be the residue and Dixon CJ observes “plainly in his devise and bequest of the whole of the residue he is speaking of what remains after the bequests with which he has already specifically dealt”. The other judges in the plurality in McBride placed weight upon these same factors in finding that a specific legacy was intended: McBride, Taylor J at 628 and Windeyer J at 631.

Unlike the gift in McBride, the gift in clause 3 did not appear among other specific bequests. But it does appear before the residuary clause 4. And clause 4 provides that the clause 3 gift is to be paid before ascertaining the residuary estate. Clause 4 directs that after paying the legacy in clause 3 the executor would “hold the residue then remaining” on trust for her sisters in Lebanon. As Dixon CJ explained in McBride, if a legacy were a general legacy, it would come out of what would otherwise be the residue. Clause 4 speaks of the testatrix’s residuary estate as being the part of the testatrix’s estate that remains after the devise in clause 3 with which he has already specifically dealt.

The structure of the will reveals the overall intention testator to separate from her other property a gift to benefit her local church to which she was profoundly attached and which she preferred over her sisters in Lebanon. The evidence does not support the conclusion that the testatrix and her sisters in Lebanon were particularly close, or that they regularly exchanged visits. Indeed, the perplexing difficulties that the executor has encountered since the death of the testatrix in locating her sisters in Lebanon is evidence denying familiarity or attachment between the testatrix and her sisters. It can be said with confidence that a failure to construe the will in the way proposed by Ms Tibbey on behalf of St Brigid’s would be likely to disappoint the intentions of the testatrix.

Two other matters should be addressed. Ms Muscat argued that the Court always leans towards construing gifts as general to avoid failure by ademption. But the contrary is true where the overall intentions of the testatrix are clear, as they are here. And the parties referred the Court to several other cases as examples of similar wordings in other wills, but it is not necessary to discuss them further. As Windeyer J explained in Pohlner at 81, in this subject area no good purpose would be served by discussing cases that are distinguishable on the facts.

Construction of the Gift – the Testatrix’s Move to an Aged Care Facility. Whether the clause 3 gift is specific or general, inferring to what property the gift in fact refers is complicated by the fact that the testatrix was cared for in permanent care facilities from 2010 during the last eight years of her life. Apart from a brief period of about six months between November 2011 and May 2012 during which she paid an accommodation bond for Uniting Illowra, Waverley, the testatrix did not own a proprietary interest in any “place” in those permanent care facilities that she was capable of gifting under her will, such as might allow her to describe the place as “my” place. The question arises how in these circumstances the Court should construe the words “my principal place of residence” in clause 3.

The Court of Appeal of Western Australia answered this question in Walsh. The testatrix in Walsh had moved into nursing home accommodation and at the time of her death still owned the property in which she formerly resided, in contrast to the present case where the TAG had sold the property. But Walsh and the cases to which it refers guide the approach the Court should take in construing the words “my principal place of residence” when faced with such circumstances. In Walsh the Court said (at [36] to [42]):

Walsh refers to (at [43] to [62]) to similar cases in other Australian jurisdictions. In In Re Rowell (1982) 31 SASR 361 Wells J upheld a bequest of testatrix’s “dwellinghouse” which she had acquired but had never occupied due to ill health for the last three years of her life. In Willis Derrington J construed a testatrix’s gift of “the house property in which I shall be residing at the time of my decease” to include a property from which the testatrix had been absent in hospital and a nursing home due to ill health for 13 years before her death. In upholding the gift Derrington J said (at 668) that “the concept connoted by the word “residing” should if possible be given such breadth as to accommodate what would seem from all the available material to coincide with the wishes and intent of the testatrix”. And in approaching the question of construction of the words “principal place of residence at her death” Hollingworth J in In Re Hood [2004] VSC 328, observed “it would be undesirable if a testator’s otherwise clearly expressed testamentary intention could be thwarted by the mere fact of hospitalisation or relocation from their customary abode prior to death”.

The testatrix’s circumstances come well within these principles up until the TAG sold the Marrickville property in 2011. The testatrix was unable to occupy her chosen home, the Marrickville property, solely because she required hospitalisation and then full-time nursing care. This case differs from Walsh after 2011 when the TAG sold the Marrickville property and converted it into money. This difference leads to consideration of the operation of TAG Act s 83.

The next questions are whether TAG Act, s 83 saves the gift in clause 3 of the will from ademption and what is the “surplus” to which it applies? A gift in a will is adeemed if the testator disposes of the subject matter of the gift or by a change in the ownership or nature of the property. Before the enactment of the English Act of 1830 on which TAG Act, s 83 is based, if the Court authorised the sale of an item of property that had been the subject of a specific legacy or devise before the person’s capacity then it was adeemed: RL at [78].

The specific gift in clause 3 would have been adeemed by the TAG’s sale of the Marrickville property in 2011 but for the operation of TAG Act, s 83. That provision and its predecessors limit the circumstances in which the ademption of a specific gift, such as the clause 3 gift, can occur by reason of the sale of the property of an incapable person. The object of the statutory provision has been described as “to protect specific gifts and to prevent ademption of them… [as] there can be no ademption of a residuary gift”: see Walker at 66 and RL at [76] and Appendix A.

TAG Act, s 83 was enlivened upon the sale of the Marrickville property in 2011 when the testatrix was a managed person under the TAG Act. Thereafter there existed “surplus money or other property arising from any sale, mortgage or disposition of any property or other dealing with the property under this Act”. Once that sale occurred “the managed person or beneficiary” was immediately imputed by s 83 to have “the same interest” in such money or property “as the managed person or beneficiary would have had in the property…if no sale, mortgage disposition or dealing had been made”. Here, as soon as the Marrickville property was sold the testatrix had imputed to her “the same interest” in the surplus as she would have had in Marrickville property.

In Christensen Hodgson J (as his Honour then was) stated that the predecessor of TAG Act, s 83 “would be effective to produce the result that the [surplus] money be treated as representing [the property sold] for the purposes of giving effect to the will”. In RL (at [98]) Campbell JA said that his analysis of s 83 was consistent with the decision of Hodgson J in Christensen, which was noted by Gleeson JA in Singh (at [223]). TAG Act, s 83 has the same effect here and the surplus is treated as representing the Marrickville property for the purposes of giving effect to the will. The testatrix’s transfer into permanent care was the involuntary result of her incapacity, so applying Walsh, the surplus representing Marrickville property did not cease to be treated as real estate that was her principal place of residence for the purposes of giving effect to the will.

Ms Muscat correctly concedes on behalf of the executor that if the clause 3 gift of ‘my principal place of residence’ is categorised as a specific gift, it will be saved from ademption by TAG Act, s 83. But she puts an alternative submission that although clause 3 separates out “my principal place of residence” from the residuary gift, such as might be characteristic of a specific gift, these words nevertheless have generic characteristics of the kind described in Windeyer J’s judgment in Pohlner at 79, where his Honour said, “a description may be generic in, in the relevant sense, either because it denotes a class or form of property capable of increase or decrease … or because it denotes in general terms an item of property of a kind that the testator commonly replaced periodically e.g. my motor car”.

But the answer to this argument is the proper construction of clause 3. The testatrix’s “principal place of residence”, the Marrickville property, will is not property of a kind that she “commonly replaced periodically”. The Court’s analysis earlier in these reasons is inconsistent with the inference that the testatrix wanted flexibility to periodically replace her principal place of residence.

An Identifiable Surplus? The executor also raises the question whether the proceeds of sale of the Marrickville property are sufficiently identified. The case law makes clear that the “the surplus money or other property” referred to in TAG Act, s 83 arising from the sale or dealing with property under the TAG Act must be identifiable and must exist in an identifiable form at the date of death: Christensen at 10-11, RL at [94] and Singh at [211].

In the submissions advanced by Ms Muscat the executor doubts that in this case there is an identifiable “surplus” to which TAG Act, s 83 will apply. But the Court’s factual analysis earlier in these reasons shows the contrary. The proceeds of sale of the Marrickville properly were effectively quarantined in fixed deposits that were redeemed and paid to Shad Partners, subject to some minor accounting issues.

For these reasons the Court will make the declaration sought in the Summons brought by St Brigid’s and will order the executor to administer the estate on that basis.

The Court considers it unlikely that the executor will need any accounting to differentiate the proceeds of sale of the Marrickville property from other funds in the TAG account. But if such an accounting is required the executor has liberty to apply until 31 October 2022 for such directions. Beyond that no other specific directions as to the administration of the estate are necessary. That can be left in the hands of the executor.

And the Cross Summons can be dismissed. As the clause 3 gift is valid nothing falls into the residue of the estate and there is no need to give any directions to the executor, as is requested on the Cross Summons, as to the steps to be taken to deal with the residue of the estate and to attempt further to find the testatrix’s sisters in Lebanon.

As to costs, the proceedings were properly brought and contested on both sides. The executor should have his costs of these proceedings out of the estate on the indemnity basis. St Brigid’s should have its costs paid out of the estate on the ordinary basis.

For these reasons Court makes the following orders and directions: