Reported Decision : [2000] 10 BPR 18,383 New South Wales Supreme Court CITATION : Application of Vera Hayes; Estate of Henry Ernest Johnston [2000] NSWSC 1097 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4596/99 HEARING DATE(S) : 23/10/2000 and 27/11/2000 JUDGMENT DATE : 27 November 2000 PARTIES : Vera Hayes (P) JUDGMENT OF : Young J COUNSEL : N Gilchrist (P) SOLICITORS : Thomas & Bisley (P) CATCHWORDS : CONVEYANCING [10]- Option by will- When exercised - SUCCESSION [168]- Construction- Option "in the event of X not wishing to purchase"- X indicates wish then withdraws. Ballas v Theophilos (No 2) (1957) 98 CLR 193 Laybutt v Amoco Aust Pty Ltd (1974) 132 CLR 57 CASES CITED : Lyle & Scott Ltd v Scott's Trustees [1959] AC 763 Oliver v Oliver (1958) 32 ALJR 198 Sydney City Council v Greek Australian Finance Corporation Pty Ltd (1974) 32 LGRA 32 Ussher v Ussher (Hodgson J, 16.11.1984) DECISION : See paras 18 and 19 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J MONDAY 27 NOVEMBER 2000 4596/99 - APPLICATION OF VERA HAYES; ESTATE OF HENRY ERNEST JOHNSTON JUDGMENT 1 HIS HONOUR: Life throws up a peculiar series of problems and this present little problem is one of them. 2 The late Henry Ernest Johnston died on 8 May 1974 leaving a will which he had made on 4 May 1973. 3 As far as the present problem is concerned, the deceased left his house at 81 Ocean Street, Windang to his sister for as long as she wished to live there and after that he made the following provision: "I further direct my Executor to sell my home at 81 Ocean Street, Windang to my Brother THOMAS JOHNSTON of Glebe at the price of SEVEN THOUSAND DOLLARS ($7,000.00) and the proceeds of sale shall form part of the residue of my estate provided that in the event of my said Brother THOMAS JOHNSTON not wishing to purchase my said home then my said home shall form part of the residue of my Estate." 4 The deceased's sister ceased to reside in the home in March 1995. At that time the solicitors for the estate, Thomas & Bisley, wrote a letter to Mr Thomas Johnston asking him to indicate his wishes. On about 23 March 1995 Mr Johnston returned the solicitors' draft notice of exercise of the option that he had signed, which read: "I hereby give notice that I wish to purchase the property known as 81 Ocean Street, Windang in accordance with the terms and conditions of the Will." 5 However, no-one had ever taken out administration of the estate so that there was in fact no representative of the estate at that time. On 24 May 1995 Ms Hughes, the receptionist at Thomas & Bisley made a note that Mr Johnston rang at 11.43 am with the message "don't want to purchase the house". 6 In October 1995 the solicitors wrote to Mr Johnston asking whether he would indicate once and for all whether he wished to cancel his right to purchase the property. The solicitors received a letter a few days later from a social worker indicating Mr Johnston died two months previously and that the solicitors' letter had been opened by his ex-wife. 7 Letters of administration dbn cta were granted to the present plaintiff on 25 May 1998. 8 The question is whether, in the events which have happened, Mr Johnston should be regarded as not wishing to purchase the property. 9 The matter is of some practical significance because between the date of the testator's death and the date of his sister quitting the property the value of the house at Windang had increased tremendously, so that any commercially minded person would want to exercise the option in the will to purchase the house for such a small price and then resell it. 10 The solicitors for the estate have done all they could by advertising in the local paper, in the Gold Coast papers and in Tasmania and by writing to as many Donald Johnstons (who appears to be the only surviving relative of Thomas Johnston) as they could find. However no Donald Johnston in Australia who could be the person concerned has replied. 11 Accordingly, we have not had a proper contradictor and thus the case is not suitable for a declaratory order; see eg Sydney City Council v Greek Australian Finance Corporation Pty Ltd (1974) 32 LGRA 32, 35. However in the circumstances, the Court may give judicial advice to the administrator that she would be justified in distributing the estate on the basis that Thomas Johnston did not wish to purchase the Windang property. 12 Options such as the present, when given in a will, confer a rather odd interest in property which the courts have struggled over the years to define precisely. The High Court in Ballas v Theophilos (No 2) (1957) 98 CLR 193 attempted to analyse the situation as they did again in Laybutt v Amoco Aust Pty Ltd (1974) 132 CLR 57. 13 In Oliver v Oliver (1958) 32 ALJR 198 the High Court took the view that where there was an option given by will to a beneficiary to purchase a property "if he so desires", a signed document from the beneficiary stating "I hereby express my desire and intention to purchase such property" was a full and sufficient election to exercise the option and there was no need to look at anything further. However, in that case it would seem that at all times after exercising the option in that way, the beneficiary intended to go through with the purchase. 14 Oliver's case was discussed by Hodgson J in Ussher v Ussher (16 November 1984, unreported). In that case his Honour also discussed the phrase "should he neglect or refuse within one month to purchase the same". The learned Judge held in all the circumstances that the beneficiary had not neglected or refused to purchase the property by his conduct. The case depends on its facts, but it is useful for the discussion of the many authorities in the field. 15 The word "wish" is a wide one: cf Lyle & Scott Ltd v Scott's Trustees [1959] AC 763. However, as Viscount Simonds says in that case at p 775 about the cognate term "desirous", there is often difficulty in determining "when a shareholder begins to be desirous and when he ceases to be desirous and at what stage he is at liberty to change his mind". 16 With the instant will, in my view the beneficiary must not just wish to acquire at one point in time, but the wish must continue until the time of conveyance. 17 Thus it is significant that at the time when the beneficiary wrote his first letter there was no current representation of the estate. There was really nothing that could be formally put to the estate's representative whereby the representative could instantly issue the contract for sale or transfer. Accordingly, the letter cannot be taken as a binding election by either Mr Johnston or the estate's representative to treat that communication as the final view of the beneficiary. Thus, in my view one must look at the conduct of the parties from 1995 until the time when letters of administration were granted. When one looks at all that conduct the conclusion that must be reached is that Thomas Johnston did not show himself willing to purchase the property in accordance with the will. Thus, the Windang property falls into residue. 18 Accordingly, the Court by order advises the plaintiff under s 63 of the Trustee Act 1925 that she would be justified in distributing the estate of the late Henry Ernest Johnston on the basis that Thomas Johnston did not wish to purchase the property at 81 Ocean Street, Windang. 19 The costs of the summons to be paid out of the residue of the estate. **************** Last Modified: 12/01/2000 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.