Supreme Court New South Wales Medium Neutral Citation: Neal v Brown [2024] NSWSC 841 Hearing dates: 1 July 2024 Date of orders: 4 July 2024 Decision date: 10 July 2024 Jurisdiction: Equity Before: Parker J Decision: See [77] Catchwords: SUCCESSION — will — construction — testamentary grant of right to occupy property — property expenses payable by "my Estate" — whether a reference to deceased estate or trust estate — superannuation entitlements — whether separate gift or estate residue — deceased submits redemption application before death — ademption Legislation Cited: Trustee Act 1925 (NSW) Cases Cited: Abernethy v Simpson [2007] NSWSC 186 Warton v Yeo [2015] NSWCA 115 Texts Cited: Jarman on Wills (8th ed, 1951, London, Sweet and Maxwell) Category: Principal judgment Parties: Summons filed 15 November 2022 Richard John Neal as Administrator of the Estate of John Sherwood Brown (Plaintiff) Danna Marie Brown (First Defendant) Gavin Francis Brown (Second Defendant) Mitchell Sherwood Brown (Third Defendant) Joanne Lee Fryer (Fourth Defendant) Cross-Claim filed 20 February 2023 Danna Marie Brown (First Cross-Claimant) Gavin Francis Brown (Second Cross-Claimant) Mitchell Sherwood Brown (Third Cross-Claimant) Richard John Neal as Administrator of the Estate of John Sherwood Brown (First Cross-Defendant) Joanne Lee Fryer (Second Cross-Defendant) Sebastian William Kladnig (Fryer) (Third Cross-Defendant) Representation: Counsel: Summons filed 15 November 2022 M S Willmott SC/H Morrison (Plaintiff) J Brown (First, Second and Third Defendants) C Alexander (Fourth and Fifth Defendants) Cross-Claim filed 20 February 2023 J Brown (First, Second and Third Cross-Claimants) M S Willmott SC/ H Morrison (First Cross-Defendant) C Alexander (Second and Third Cross-Defendant) Solicitors: Summons Filed 15 November 2022 Teece Hodgson & Ward (Plaintiff) Blanchfield Nicholls Family & Private Advisory (First, Second and Third (Defendants) Bull Son & Schmidt (Fourth and Fifth Defendant) Cross-Claim filed 20 February 2023 Blanchfield Nicholls Family & Private Advisory (First, Second and Third (First, Second and Third (Cross-Claimants) Teece Hodgson & Ward (First Cross-Defendant) Bull Son & Schmidt (Second and Third Cross-Defendants) File Number(s): 2022/343187 Publication restriction: Nil JUDGMENT- ex tempore Revised from transcript; issued 10 July 2024 1 July 2024: 1. These are proceedings concerning the administration of the estate of the late John Sherwood Brown who died in January 2019. Principally, the proceedings are concerned with the interpretation of the Deceased's will, which was executed shortly before his death. 2. The Deceased was survived by his children, Mitchell Sherwood Brown, Danna Marie Brown and Gavin Francis Brown. I will refer to them as "the Children". 3. The Deceased was also survived by his companion, Joanne Lee Fryer, and her son, Sebastien William Kladnig, also known as Sebastien William Fryer. He was treated in the will as another one of the Deceased's children. For convenience, and without intending any disrespect, I will refer to him as Sebastien. 4. Under the will, the Deceased appointed his financial adviser, Mr John Mant, as his executor and trustee. In the end, however, Mr Mant disclaimed the office, and a solicitor, Mr Richard John Neal, was appointed as administrator of the Deceased's estate. The order appointing Mr Neal ("the Administrator") was made on 1 July 2020, but letters of administration did not issue until 26 August. 5. The present proceedings were commenced by the Administrator in November 2022. The beneficiaries fall into two camps. The Children are the first, second and third defendants. Ms Fryer and Sebastien are the fourth and fifth defendants. 6. In February last year, a cross-claim was filed on behalf of the Children as cross-claimants. The Administrator is the first cross-defendant. Ms Fryer and Sebastien are the second and third cross-defendants. 7. The Administrator's originating summons took the form of an application for judicial advice. The Court was asked to advise the Administrator that he would be justified in taking specified views on various questions which had arisen concerning the interpretation of the Deceased's will. Those questions were set out in an annexure to the statement of facts filed in support of the summons. 8. In the course of the proceedings, and with the joinder of all parties interested, the application has, in substance, become an application for determination of the questions specified in the statement of facts: see s 63(8) and (11) of the Trustee Act 1925 (NSW). 9. Not all of the questions which have arisen are necessarily to be determined at this hearing. In November last year, Meek J made an order identifying for determination certain of the questions set out in the statement of facts, as well as certain of the prayers for relief (which relevantly sought declarations) in the Children's cross-claim. 10. The determination of those matters came on for hearing before me today. The Administrator, the Children, Ms Fryer, and Sebastien were represented by counsel. There was some brief affidavit evidence, and some documents were tendered, but there is no factual issue to be resolved. 11. I will describe the will in due course. For the moment, it is sufficient to say that it provides not only for the administration of the Deceased's estate but also for assets to be held on trust for specified periods of time. The first question for determination, which may affect what other questions arise for decision, is when, under the terms of the will, the administration was (or is) to finish and the executor's role was (or is) to be transformed into a trustee of the will trusts. Interpretation of will 1. The principles which I am to apply in interpreting the will are not in doubt. In particular, I am required to do so in accordance with what is sometimes called the "armchair principle": see Warton v Yeo [2015] NSWCA 115 at [35]. 2. One of the factors to which the armchair principle draws attention is the assets which the Deceased possessed at the date of making the will and which he might have expected to possess at the date of his death. In the present case, the will was made by the Deceased when he was in the advanced stage of a terminal illness. He, in fact, died only a few days after the will was made. It is, therefore, reasonable to proceed on the basis that the Deceased would have contemplated that the assets he held at the date of the will would form part of his estate. 3. Before being admitted to hospital at the end of his life, the Deceased had been living at a house in Glebe with Ms Fryer and Sebastien. The house was valued in the Deceased's inventory of property at $2.2 million. The Deceased also owned, jointly with Ms Fryer, a property at Nabiac on the Mid North Coast. On his death, that property passed to Ms Fryer by survivorship. The Deceased, however, does not appear to have appreciated this: one of the clauses in the will purported to give the Deceased's share in the property to Ms Fryer. 4. The Deceased's assets included some farm equipment, furnishings and decorations for the Glebe house and the Nabiac house and two motorcars including a 1980 Ferrari valued in the inventory of property at $120,000. The Deceased was also a member of two superannuation funds. The total payout benefit from the two superannuation interests was approximately $1.4 million. The Deceased also held about $45,000 in bank accounts. 5. I will now describe the terms of the will. By cl 2, the Deceased appointed Mr Mant, "as Executor and Trustee ("Trustee") of" his will. Provision was made for Mr Mant to charge reasonable professional fees for the discharge of his duties under the will "upon proof of account to the Estate". By cl 3, the Deceased directed payment of all "just debts, funeral and testamentary expenses", and required that provision be made to cover Mr Mant's "estimated fees and expenses", as Trustee. 6. Clause 4 provided: I DIRECT my Trustee to sell, call in and convert into money such parts of my Estate as shall not consist of money with power to postpone the sale, calling in and conversion thereof without being responsible for any loss occasioned thereby and thereafter and where necessary in respect of any beneficiary under age to hold in trust for the welfare of such beneficiary until that person attains the age of twenty five (25) years (or such other age as may be expressly provided herein) whereupon he or she shall forthwith receive for his or her benefit absolutely the due share of my Estate. 1. Clause 5 made specific gifts to Ms Fryer "for her benefit absolutely". Apart from the purported gift of the Deceased's share of the Nabiac property, the Deceased gave Ms Fryer all of the farm implements and equipment at the property, and also all "wall hangings, including prints and photographs" at the Nabiac property, and at the Glebe property. 2. Clause 7 is the clause which is specifically in issue for the purpose of determining the present question. The clause provides: I GIVE & DEVISE all my right title, interest and estate in my real property at XX Wigram Road, Glebe, NSW and any other real property I may own at the time of my death (not otherwise expressly provided for hereinbefore) to be held by my Trustee to be left in equal shares, to those who may survive me, being [the Children] and [Sebastien] for their respective benefit absolutely, strictly subject to the following: (i) The property at XX Wigram Road, Glebe, NSW includes all existing household furniture; my antique extendable dining room table; eight (8) reproduction chairs' floor coverings; artwork; wall hangings; and appliances to be held in trust by my aforementioned Trustee and made available for the exclusive residence and use of [Sebastien] until such time as he completes his formal education, vacates the said property or attains the age of twenty five (25) years, whereupon my Trustee will transfer the said property and aforementioned inclusions in equal shares to the beneficiaries referred to in Clause 7 above for their respective benefit absolutely. (ii) During any period of residence by [Sebastien] his mother [Ms Fryer] will also be entitled to reside with him subject to exclusive occupation by them, provided he/they keep the property clean and tidy, in a good state of repair and maintenance and to be liable for all periodic costs and expenses thereof; but my Estate shall otherwise be liable for payment of council and water rates, insurance and any repair or replacement of capital items. (iii) My Trustee will upon giving reasonable notice be entitled to inspect the said property from time to time. 1. Clause 8 dealt with the Deceased's superannuation entitlements. It provided: I CONFIRM all net monies from my superannuation and pension entitlements in PortfolioOne Pension Service (PIN XXXXXXXXX) and OnePath OneAnswer Frontier Pension (PIN XXXXXXX) and all other pension, retirement or superannuation funds (if any) in my name or held in my favour at the time of my death be received by my Trustee into my Estate and then to be left and distributed in equal shares to those surviving me being [the Children] and for [Sebastien] (to be held in trust until he attains twenty five (25) years of age) for their respective benefit absolutely. 1. Clause 9 dealt with the residue of the estate. It provided: I LEAVE all the REST & RESIDUE of my Estate in equal shares to those who survive me being [the Children] and [Sebastien] (to be held in trust until he attains twenty five (25) years of age) for their respective benefit absolutely. 1. Clause 11 conferred various specific powers on the Trustee. These relevantly included: (i) retain any property comprised in my Estate at the date of my death as an investment authorised by this Will; (ii) sell any such property at such times and upon and subject to such terms and conditions as my Trustee thinks fit; … (v) borrow money and if required to give security for that borrowing over any part of my Estate for any purpose considered necessary or desirable by my Trustee in connection with the administration of my Estate or the execution of the trusts of this Will; and (vi) use any part of the vested or contingent share of capital or income of any beneficiary who has not attained the vesting age provided by law or specified in this Will (whichever date shall be later) for the maintenance, education and advancement in life or otherwise for the benefit of that beneficiary. Expenditure on Glebe property during occupation by Sebastian 1. The question which has arisen, and on which I first heard argument, concerns Sebastien's occupation of the Glebe property (with his mother) under cl 7 of the will. Sebastien turned 18 in the course of the proceedings and finished his HSC at the end of last year. He is now an undergraduate student at the University of Technology, Sydney. He will not attain the age of 25 until 2030. 2. The specific question arises out of the wording of cl 7(ii), and, in particular, the provision by the Deceased that, "my Estate" would be "liable" for certain types of expenditure, namely rates, insurance and capital works. There is a dispute about how such expenditure is to be borne as between the beneficiaries. 3. Counsel for Ms Fryer and Sebastien contended that the reference to "my Estate" was to the Deceased's estate, as administered by his executor. On this contention, the effect of that provision is that administration of the Deceased's estate will not be completed until the trust established under cl 7 comes to an end, which will not occur until Sebastien completes his formal education, leaves the Glebe property, or attains the age of 25 years. 4. Counsel for the Children disputed this interpretation of cl 7(ii). Counsel submitted that the reference to "my Estate" was a reference to the Trustee in his capacity as trustee of the will trust established by cl 7(i). Counsel for the Administrator did not take any formal position on the question but made submissions generally supportive of the submissions by counsel for Ms Fryer and Sebastien. 5. All parties agree that, as a matter of drafting, the will leaves something to be desired. I have already referred to the purported gift of the half-share in the Nabiac property. Another feature of the will is a lack of clear delineation between the functions to be undertaken by Mr Mant (and now the Administrator) as executor, as opposed to the functions to be undertaken by him as trustee of the will trusts. This may derive, at least in part, from the adoption of the defined term, "the Trustee", which means both executor and trustee. 6. On its own, cl 7(i) is, I think, relatively clear. It refers to the Glebe property and its contents as being "held in trust by my aforementioned Trustee". On the face of it, that trust begins (and the property is to be registered in the name of the Trustee) once administration has been completed, and runs until Sebastien attains the age of 25 (unless he earlier vacates the property or completes his education). Where the Deceased refers, at that time, to "my Trustee" transferring the property to the Children and Sebastien, the reference, on the face of it, is to a trustee, not an executor. A similar observation may be made about cl 7(iii) which gives the Trustee a right to inspect the property. 7. Difficulty arises because of the expression "my Estate", in cl 7(ii). Counsel for Ms Fryer and Sebastien emphasised the use of that particular term, which he submitted was the language of an executor's administration rather than a trustee's administration. There is some force in this, but I do not think that it can be pressed too far. It is commonplace in the case of a will trust arising on completion of administration for the parties to continue to refer to the trust assets as "the Estate". 8. Another difficulty is that cl 7(ii) uses the language of liability. Strictly speaking, it is more natural to speak of persons being liable for payments, rather than an estate. Another way of expressing the issue that arises in this case is that it is necessary to identify whether, on its true construction, the liability is imposed on the executor of the Deceased's estate, rather than on the trustee of a will trust. Given the other difficulties with the construction of the will, I think that the selection of the word "Estate" cannot be decisive. 9. Both counsel for Ms Fryer and Sebastien and counsel for the Administrator submitted that surrounding circumstances suggested that it was a (continuing) deceased estate which was intended rather than a will trust estate. As counsel for the Administrator put it, cl 7 was clearly intended to give Sebastien a right of residence (and also Ms Fryer if Sebastien exercised that right). Counsel acknowledged that this right of residence was not a life estate, but submitted that it was still the type of interest which would be recognised and protected by the Court. If the administration of the estate did not continue, and recourse to the residuary assets to fund the expenses of the "Estate" was not available, the benefit would, counsel submitted, effectively be nugatory. 10. Counsel for Ms Fryer and Sebastien added that, at the time the will was made, the Deceased cannot have contemplated that Sebastien, who was then a minor, would be funding the expenses associated with maintaining the property himself. 11. A difficulty with this argument is that the Deceased's "Estate" is, on any view, to be liable only for certain items of expenditure, namely payment of council and water rates, insurance and repair or replacement of capital items. Ordinary household costs, running repairs and maintenance were always expenses which would have to be borne by Sebastien or Ms Fryer for as long as they wished to occupy the property. 12. There was some debate before me about whether the obligation to pay for "all periodic costs and expenses" would extend to mortgage payments, either capital or interest, but it is not necessary to deal with that question at the moment. It is sufficient to say that the Deceased must have contemplated that if Sebastien (or Sebastien and his mother) were to live at the property then there would be a financial cost to them which would have to be funded from outside the Deceased's estate. 13. It is true that when the will was made, Sebastien was only a minor, but, no doubt, the Deceased assumed that if he and his mother wished to continue occupation of the property, then, at least until he turned 18, she would pay the necessary expenses. 14. Nor do I accept that if liability for the payment of council and water rates, insurance and any repair or replacement of capital items, did not fall on the residue of the estate that this would render the gift nugatory. The Trustee's powers to borrow and to use Sebastien's share of capital in the trust for his maintenance, education, and advancement in cll 11.5 and 11.6 would be available. 15. Furthermore, as I will describe in more detail in a moment, the effect of cl 9 is to postpone the vesting of the gift of Sebastien's share of the residue until he attains the age of 25. This is reinforced by cl 4. The result is that Sebastien's share of the residue (which, given that it would include the proceeds of the Deceased's superannuation would be substantial) could be used by the Trustee to defray the costs. 16. In my view, the decisive point concerns the structure of the will. Clause 9 draws a clear distinction between the Children on the one hand, and Sebastien on the other. The gifts of residue to the Children are, on the face of it, to be made as soon as administration is completed but, at that point, Sebastien's share, although ascertained, is to be held on trust until he attains the age of 25. 17. There was a debate before me concerning one of the other issues in the case, which is whether the superannuation and pension entitlements, in fact, fall within cl 8 or cl 9. But it is not necessary to go into that question for the moment because cl 8 creates a similar distinction. The distinction is reflected also in cl 4. 18. If I were to accept the argument presented for Ms Fryer and Sebastien, I would, for practical purposes, be dissolving that distinction. All of the residue would have to be held until Sebastien attains the age of 25, (at least unless one of the other conditions in cl 7(i) was satisfied). That is because the administration cannot be completed until all of the expenses which fall on the executor, as executor, are discharged. But in my view, it is quite clear that the Deceased intended that the Children should receive their quarter shares of the rest of the estate, including their share of the proceeds of the superannuation entitlements, immediately, without having to wait until Sebastien attains the age of 25. 19. A similar point can be made about the gifts in favour of Ms Fryer in cl 5. Again, the relevant assets could not be handed over to Ms Fryer until the administration of the estate was completed in case they were needed to meet estate liabilities. 20. Counsel for Ms Fryer and Sebastien submitted that such a result would make little practical difference, the suggestion being that the assets the subject of the gift would remain at the Nabiac property (or, in the case of the wall hangings, at the Glebe property) in any event. But I cannot accept this. The Administrator must know where he stands. I cannot see any way in which I could uphold the argument for Ms Fryer and Sebastien without concluding that the Administrator would remain the owner of the assets the subject of cl 5 until administration is completed. 21. For these reasons, I consider that the question should be resolved in favour of the Children. (Counsel addressed on the next issue for determination.) Superannuation entitlements 1. The next issue concerns the Deceased's superannuation entitlements. I have already quoted cl 8 of the will, which refers to those entitlements. 2. There are two questions for determination. First, does cl 8 provide for separate gifts of the proceeds of those entitlements in favour of the Children and Sebastien (in Sebastien's case, to be held on trust until he attains the age of 25). Or do those proceeds fall into the gift of residue in cl 9. The second question is whether, if cl 8 creates separate gifts, such gifts fail because of ademption. 3. For the purpose of understanding this issue, it is necessary to say something more about the facts. On the same day as the Deceased executed his will, 18 January 2019, he signed withdrawal requests to the two superannuation providers, OnePath and PortfolioOne. Those requests asked for the superannuation entitlements to be paid out to the Deceased by crediting the relevant funds to one of the Deceased's bank accounts. 4. On 24 January, OnePath processed the withdrawal, and the funds were credited to the Deceased's account. This was the day before the Deceased died on 25 January. 5. The PortfolioOne withdrawal was not processed until later. According to the redemption notice, withdrawal was effected as at 1 February and the monies were paid to the Deceased's nominated bank account on the same day. 6. In argument counsel referred me to documents in evidence recording the Deceased's instructions to his solicitor, Mr Howard Charles, who was responsible for drafting the will, and to his financial advisor, Mr Mant. 7. The first document is a handwritten file note of Mr Charles recording the conference at which the will was executed (on 18 January 2019). Other evidence before me establishes that the conference took place at Mr Charles' office. It lasted for 50 minutes, between 10am and 10.50am. 8. According to the note, Mr Charles first saw the Deceased on his own to discuss the will, which apparently had already been drafted. The note records that the Deceased was satisfied with the terms of the will, apart from wanting some extra provision for paying Mr Mant's fees. Clause 2 was amended. The Deceased read the amended will and, "okayed it". 9. According to the note, Mr Mant then joined Mr Charles and the Deceased, and there was some discussion about his role and responsibility under the will. Among other things, the note records: "They [apparently Mr Mant and the Deceased] discussed arrangements for super/life. To be done ASAP. JM [Mr Mant] to withdraw super moneys to form part of the Estate." 10. The next document in evidence is a letter from Mr Charles to the Deceased, dated the same day, reporting on the conference. Among other things, Mr Charles wrote: Provisions have been made for payment of your Trustee's reasonable professional fees and expenses for administering the Estate, which will involve managing properties into the foreseeable future as a result of provisions made for [Sebastien]. Both John [Mr Mant] and yourself are aware of the legal status of superannuation accounts which do not form part of your legal Estate but you have made provision of any funds to be received into the Estate and ultimately divided in accordance with the Will, if that were to occur. You instructed me steps will be taken now to cash in your superannuation benefits. 1. The third document in evidence is a file note made by Mr Mant on 21 January, three days after the will was signed. The note referred to Mr Mant's attendance at the conference with Mr Charles and the Deceased. It continued: I have agreed to become executor of John's [the Deceased's] estate. We discussed my fees for this role which would be on an hourly rate - along with all necessary costs incurred. [Mr Charles] went through the Will with John and myself in some detail. Because John's illness has now progressed and his diagnosis is very poor - he estimates that he has months to live, he has asked me to arrange the redemption of his existing account based pensions. He will use the proceeds to repay any remaining debts and keep the balance in a secure bank account. Redeeming the pensions now should save his eventual estate approximately $100,000 in tax (3/4 of the tax which would otherwise apply). This is a time critical situation given John's health and he asked me to proceed ASAP. 1. As already noted, the first question is whether cl 8 provides for a gift at all. As counsel for Ms Fryer and Sebastien pointed out, the clause does not, at least in conventional form, provide for a gift. Instead, it speaks of a confirmation. The language is clumsy. But it seems that what the Deceased is confirming in the will is that the proceeds of his superannuation entitlement are to be "received into [his] Estate" by the Trustee. 2. On the other hand, the clause then goes on to say that the proceeds are "to be left and distributed" to the Children and Sebastien. And it does so in a form which is conventional for a gift, setting out the full names of the recipients, referring, in Sebastien's case, to the proceeds being held on trust, and then providing that the monies "left and distributed, are to be for each of the Children's and Sebastien's "respective benefit absolutely.'" The relevant terms are, in fact, identical with those that appear in cl 9, the residue clause, which is indisputably a provision for a gift in conventional form. 3. Counsel for the Children also relied on cl 10, which I have not so far quoted. That clause provided, in a conventional way, that in the event of the death of a beneficiary leaving a child or children, then the child or children were to receive the beneficiary's share. It continued: …PROVIDED HOWEVER should a deceased beneficiary leave a child or children of their own then that child shall receive any deceased beneficiary's share to vest in them (and if more than one then in equal shares) upon attaining the age of twenty five (25) years for their respective benefit absolutely and this provision applies to Clauses 7, 8 and 9 hereinbefore. Counsel's point was that cl 10 expressly refers to cl 8, alongside the other gift clauses (cll 7 and 9). 1. Counsel for Ms Fryer and Sebastien submitted that the documentary evidence to which I have referred shows that it was the Deceased's intention that the superannuation proceeds would fall into the Deceased's estate and be dealt with in the same way as the residue. Counsel further submitted that at the time the will was made, the Deceased intended to convert the superannuation entitlements into cash at which point they would form part of the residue of the Deceased's estate in any event. As I understood the submission, there was therefore no need to read cl 8 as a separate gift. 2. I think it is safe to assume that cl 8 was included because of the perception, recorded in Mr Charles' letter, that the Deceased's superannuation entitlements would, or might not, form part of his estate. Even without the reference in Mr Charles' letter, I would probably have inferred that anyway since it is well known that at least some superannuation fund trust deeds give the trustee a discretion as to who is to receive members' entitlements when they are paid out. 3. No doubt Mr Mant and the Deceased did contemplate, at least from 18 January onwards, that a request could be made to redeem the superannuation entitlements, and that if that request was accepted and acted upon before the Deceased's death, the moneys would be paid to him. But I am not sure that this goes far enough for the purposes of the armchair principle. 4. It seems clear enough from Mr Charles' notes that the will was signed before the discussion with Mr Mant about cashing in the Deceased's superannuation. As the draft had already been prepared before the conference, the form of cl 8 would not necessarily have been influenced by that discussion. 5. There is no evidence of any earlier decision to cash in the deceased's superannuation. Although the Deceased knew that he was terminally ill, it appears from Mr Mant's note of 21 January that he believed he still had several weeks or months to live. If there had been an earlier decision, cl 8 (if included at all) might well have referred to it, or taken some other different form. 6. In the end, however, I do not think it matters greatly whether or not the instruction to Mr Mant was something that was contemplated or, perhaps, foreseen, at the time the will was executed. Even if I accept that cl 8 was only a stopgap, the question that arises is what the Deceased intended for the period of that stopgap. 7. In this regard, I think the form of the will is the most significant consideration. If I were to accept the argument from counsel for Ms Fryer and Sebastien, cl 8 would only be a statement of the obvious, namely that superannuation receipts were to form part of the Deceased's estate. There would really be no point in having the clause at all. 8. I also think that, while there is no express reference to a gift or a legacy, the reference to the proceeds being "received by my Trustee into my Estate and then to be left and distributed in equal shares to" the Children and Sebastien supports the argument by counsel for the Children. That phrase seems to me to contemplate moneys being received after death and then being specifically gifted to the Children. The reference to cl 8 in cl 10 also supports that analysis. 9. For these reasons I conclude that cl 8 provides for separate gifts of the proceeds of the Deceased's superannuation entitlements. 10. The remaining question is whether one or both of those gifts have been adeemed as a result of subsequent payment out in accordance with the Deceased's instructions. 11. I will deal first with the PortfolioOne superannuation entitlement. On the face of it, that entitlement falls squarely within the words of cl 8. Counsel for Ms Fryer and Sebastien submitted that, as at the date of the Deceased's death, he had taken all steps necessary to convert that superannuation entitlement into cash by lodging the form. But on the evidence before me, the redemption did not occur until after the Deceased's death. 12. The question in the present case is not whether equity should perfect an imperfect gift. The question is whether, as at the time of the Deceased's death, there was anything which answered the description in cl 8. In my view, there clearly was. I do not find it necessary to decide whether the redemption request could have been countermanded before the request was processed, although I can see no reason why it could not have been. The important point is that, as at the date of the Deceased's death, there was a functioning superannuation account which had not been converted into cash and the superannuation fund trustee's obligations with respect to that account were continuing. In my view, the PortfolioOne superannuation entitlement was not adeemed and the separate gift of the proceeds of that entitlement in favour of the Children and Sebastien takes effect. 13. The facts concerning the OnePath entitlement, however, are different. In that case, the relevant equitable and statutory obligations of the superannuation fund trustee ceased when the monies were paid into the Deceased's bank account before his death. There was, in my view, no superannuation or pension entitlement "at the time of [the Deceased's] death". 14. Counsel for the Children resisted this conclusion by relying on the principles stated in Jarman on Wills (8th ed, 1951, London, Sweet and Maxwell) which were quoted by Young CJ in Eq at [37] of Abernethy v Simpson [2007] NSWSC 186: (at p 1063): "Sometimes a testator describes personal property with reference to the source from which he derives it: as where he gives to A 'all the property to which I am or may be entitled under the will of X' … . The general principle seems to be that so long as the property in question continues to exist in specie, or can clearly be traced into investments made by the testator and retained by him at his death, it will pass by the gift, but if it is sold and the proceeds are spent by the testator or mixed with his other property, the gift fails." (at p 1073): "If the property is actually made over to the testator during his lifetime, the question is more difficult. If it were converted into money and mixed by him with his own property, the bequest would fail, but this result does not necessarily follow if the property is preserved by him in specie or can otherwise be traced and distinguished from his other property." 1. Counsel's submission was based on Mr Mant's file note. Counsel argued that the Deceased's intention had been to hold the proceeds of the redemption separately, and, accordingly, there remained some "net monies" within the meaning of cl 8. 2. There are, I think, multiple difficulties with this submission. In the first place, I am not sure that the reference to a "secure bank account" in Mr Mant's file note can be taken into account under the "armchair principle". I have already pointed out that, according to Mr Charles' notes, the discussion about superannuation seems to have taken place after the will was drafted and executed. Furthermore, Mr Charles' note does not make any reference to any "secure bank account" and it is possible that any such discussion, in fact, took place after 18 January, and before Mr Mant made his file note on 21 January. 3. In any event, Mr Mant's note does not refer to the funds being completely segregated. Rather, there is a reference to repaying "any remaining debts". In the context, this must clearly extend to liabilities other than those associated with the superannuation entitlements. Use of the moneys in that way may not have been permissible, given the views that I have reached about the interpretation of the will, but the important point is that the reported instruction does not contemplate a complete segregation of the funds, such that they were to be kept exclusively for the benefit of the Children and Sebastien, as the beneficiaries of the gift in cl 8. In fact, as we know, the request was for the funds not to be kept in a separate bank account, but to be credited to one of the Deceased's working bank accounts where it would be (and was in fact) mixed with other funds of the Deceased. 4. Returning to the principles stated in Jarman on Wills (above [71]), I do not think that the present case is analogous to a gift of a receipt or expectancy from some other source, such as an estate. In any event, as I have already mentioned, the proceeds were, in fact, directed by the Deceased to be credited to one of his bank accounts, and, therefore, mixed with his other funds. In my view, no question of somehow tracing the proceeds through that account can arise. 5. For these reasons, I conclude that cl 8 gave rise to a separate gift, which, in the events which have happened, is a gift only of the PortfolioOne proceeds. (Counsel undertook to bring in minute of order, agreed if possible, to reflect the Court's conclusions.) 4 July 2024: Orders 1. The orders of the Court are: 1. Declare, on a proper construction of the will of the late John Sherwood Brown (the "Deceased") dated 18 January 2019 ("Will"), and in the events that have happened, that clause 8 of the Will gives rise to a separate gift of the proceeds of the Deceased's Superannuation and other entitlements with PortfolioOne, being the proceeds of PortfolioOne Pension Service account P/N 802296506 and comprising $1,225,868.94 paid to the Deceased's Westpac Account on 1 February 2019. 2. Declare, on a proper construction of the Will of the Deceased, and in the events that have happened, that the proceeds of the Deceased's Superannuation and other entitlements with OnePath, being OnePath OneAnswer Frontier Pension account P/N 6790554, and comprising $162,539.55 paid to the Deceased's Westpac Account on 24 January 2019, form part of the rest and residue of the estate in clause 9 of the Will and is not dealt with by clause 8 of the Will. 3. Declare, on a proper construction of the Will of the Deceased, and in the events that have happened: 1. That clause 7 of the Will establishes a trust comprising the deceased's property at 32 Wigram Road, Glebe, NSW ("the Glebe Property"); 2. That the Plaintiff is the Trustee of that trust ("the will trust"); 3. That the balance of the deceased's estate, including residue, is not liable to bear expenses of a kind set out in clause 7(ii) of the Will, being "…council and water rates, insurance and any repair or replacement of capital items"; and 4. That the expenses set out in clause 7(ii) of the Will, being "…council and water rates, insurance and any repair or replacement of capital items" are payable, from the will trust established by clause 7 of the Will. 1. Note that the Court has not determined the question as to where, amongst the beneficiaries of the will trust, the ultimate burden will lie for the payment of expenses as contemplated in paragraph 3(d) above and clause 7(ii) of the will, and the mortgage, and that no issue estoppel arises in respect of this question. 2. Declare that, on proper construction of the Will of the Deceased, and in the events that have happened, the mortgage registered on the title to the Glebe Property passes with the gift of the Glebe Property in clause 7 of the Will. 3. Order that the plaintiff, on or before 15 August 2024, file and serve on all parties his account of all moneys received and disbursed by the plaintiff and any other person on his behalf in respect of the property comprised in the estate of the Deceased and of the dealings and transactions of the plaintiff therewith. 4. Direct that such account shall specify in respect of each payment or receipt, the date and amount thereof, to whom the payment was made, and the purpose or account for or to which the amount was paid or received, as the case may be. 5. Direct that such account shall specify, in respect of each payment, the part of the estate of the deceased which shall bear the burden of each payment. 6. Grants liberty to the parties to apply to Parker J, on seven days' notice, with respect to any matter arising from: 1. the account; 2. his Honour's judgment of 1 July 2024; and 3. the matters listed for separate determination in these proceedings by Meek J that any party says requires further determination by the Court. 1. Reserve all questions of costs. 2. Order that the matter be listed for directions before Parker J on 6 September 2024. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 July 2024