Supreme Court New South Wales Medium Neutral Citation: Stone & Drabsch v Pinniger [2011] NSWSC 795 Hearing dates: 7 July 2011 Decision date: 29 July 2011 Jurisdiction: Equity Division Before: Nicholas J Decision: Paras 46-47 Catchwords: SUCESSION - whether informal document made after will purported to state testamentary intention of deceased - turns on facts - no questions of general principle - section 8 Succession Act Legislation Cited: Succession Act 2006 s 8 Wills Probate and Administration Act 1898 s 18A Cases Cited: In the Estate of Masters (deceased); Hill v Plummer (1994) 33 NSWLR 446 Re The Estate of Cropley; Cropley v Cropley [2002] NSWSC 349 Category: Principal judgment Parties: Karen Patricia Stone (First Plaintiff) Kerry Ann Drabsch (Second Plaintiff) Wayne Jon Pinniger (Defendant) Representation: Counsel J Sandford (Plaintiffs) K Morrissey (Defendant) Solicitors Matthews Williams (Plaintiffs) Coode & Corry (Defendant) File Number(s): 2009/291134 Judgment 1HIS HONOUR : Mr Ian Landseer Pinniger ("the testator"), a company director, died on 28 March 2009 aged 69 years. He made a will on 2 May 2008 ("the will") which was prepared and held by his solicitor, Mr Peter Buckley. Shortly afterwards, the testator prepared a handwritten document ("the document") which he gave, unsigned, to Mr Buckley to be held with the will. 2By his will, the testator appointed his daughters, Karen Stone and Kerry Drabsch ("the plaintiffs") and his nephew, Wayne Jon Pinniger ("the cross-claimant") as executors. He gave a legacy of $300,000 to Margaret Ann Robinson, and left the residuary estate to his daughters in equal shares as tenants in common. 3The plaintiffs seek a grant of probate in solemn form. Due execution is admitted. 4By his amended cross-claim filed 14 June 2011, the cross-claimant seeks relief under s 8 Succession Act 2006 ("the Act") in respect of that part of the document ("the part") which states: "To be read in conjunction of (sic) will Dated as per will Dear Karen Kerry & Wayne I wish you to carry out instructions as in will, I know you may not like some instructions but due to the complex financial situation I would like you to make sure Patricia is paid 20000 per month from hotel a/c up and until you sell the hotel where she will be paid $3.350000.00 which should be approximately 50% of value & through your shares in Yenlan & IWT Karen 20% Kerry 20% and on the provision that Wayne manages the hotel for five years or until hotel sold he should receive 10% of hotel." 5The cross-claimant seeks declarations that the part forms an alteration, or a partial revocation, of the will, and an order that probate of the will and the part be granted to the plaintiffs and the cross-claimant in solemn form. 6The estate has a gross value of $6,306,663 and a net value of $2,950,575. Liabilities include an unsecured liability to the testator's widow, Mrs Patricia Ann Pinniger, in the amount of $3,350,000 pursuant to an order of the Family Court of Australia made 20 June 2007. 7At all material times, Yenlan Pty Limited ("Yenlan") has been the trustee of the discretionary Pinniger Family Trust, and the proprietor of the property at 51 Durham Street, Bathurst at which is located the Panorama City Hotel (the hotel). At all material times, International Wool Traders (Australia) Pty Limited ("IWT") has been the trustee of the discretionary Pinniger Trading Trust and the proprietor of the business enterprise trading as the Panorama City Hotel/Motor Lodge. The testator's shares in Yenlan and IWT passed to the plaintiffs under the will, and have been transferred to them. The plaintiffs are also directors of Yenlan and IWT. 8Mr Peter Buckley was the testator's solicitor for many years. His evidence, which I accept, established the circumstances in which the will was made and in which the document was given to him. The relevant history is as follows. 9On 10 April 2008, the testator attended Mr Buckley in his office, and gave instructions for the preparation of his will. Mr Buckley explained the distinction between the testator's personal property and the assets owned by each of Yenlan and IWT. The testator expressed a wish to leave to Ms Robinson some land described as the "Troy" property. In response, Mr Buckley advised that as it was owned by Yenlan the property was not his to leave under a will. In his affidavit of 22 July 2010, Mr Buckley deposed: "9. I went on to explain to the testator that, whilst he had control of the Trusts, the assets so held were not his to bequeath by his Will. I believe that my explanation to the testator in this respect, most likely touched on other assets owned by Yenlan, the principal asset of which company, was (and is) the Panorama City Hotel at Bathurst. The discussion that ensued between the testator and me, in relation to this subject matter, included an exchange to the following effect: The testator said: ' How can I leave part of it to Margaret?' I said: ' First of all you would have to get it valued, and you will pay stamp duty on whatever it is valued at, so that you can transfer it out of the trust to yourself. That will involve not only stamp duty, but will probably also put it into the capital gains net' 10. At the request of the testator, I gave to him an estimate of the likely stamp duty payable. My recollection is that I based that estimate on an offer that had been made by a prospective purchaser of the Troy property. Although I cannot now recall the precise offer made by that prospective purchase, I believe that it was in the vicinity of $700,000-$800,000. 11. After informing the testator of my estimate of the stamp duty likely to be payable on any transfer to him, of the Troy property, and having mentioned to the testator, the probability that capital gains tax would be incurred, the testator said to me words to the following effect: 'That's too much. I'll leave her some money then. I'll think about it.' 12. Following this discussion, the testator's instructions to me were to leave the whole of his estate to his daughters Karen Patricia Stone, and Kerry Ann Drabsch, in equal shares. Further, he instructed me to appoint his daughters, and his nephew, Wayne Jon Pinniger, as executors. In the latter respect, the testator remarked to me: 'I wish to appoint Wayne as an executor to keep the peace between the girls.' 13. I arranged for my secretary to type up the testator's Will, which he made before leaving my office on 10 April 2008. 10By his will made 10 April 2008, the testator appointed the plaintiffs and the cross-claimant as executors and trustees, and left the whole of his estate to the plaintiffs in equal shares as tenants in common. 11On 18 April 2008, the testator attended Mr Buckley in his office and informed him that, having reflected on the matter, he had decided to leave Ms Robinson the sum of $300,000, with the rest of his estate to be left to the plaintiffs in equal shares. 12On 2 May 2008, the testator attended Mr Buckley in his office when he made the will the subject of these proceedings. Then followed a discussion to the effect that, as a result of the family law settlement, Mrs Pinniger was to have $3.3 million in addition to other property. The testator also indicated he wanted to transfer to her a one half interest in the hotel, but because of the trust structure could not do so without incurring capital gains tax and stamp duty. Accordingly, he instructed Mr Buckley to write the letter of 2 May 2008 to Mrs Pinniger in the following terms: "Ian has asked us to write to you and confirm that the Family Law Consent Property Orders made on 20 June, 2007 are fully binding on his Estate in the event of his death prior to the terms of the Orders being completed." 13Shortly afterwards, the testator again attended Mr Buckley in this office and gave him the document, saying in effect: "Can you put this in my packet so that the girls and Wayne will know what I've got and where everything is?" There was no discussion, and Mr Buckley placed the document in the testator's safe custody packet. 14Some months later the testator again attended Mr Buckley in his office, and gave him another handwritten document requesting it be put in his packet. Although he found it to be indecipherable, Mr Buckley discerned that it contained a list of assets. He handed it back to the testator saying: "Ian, you have already given to me a list of assets." Mr Buckley then extracted the first document from the packet, and at the testator's request arranged for it to be typed up and placed in the packet. A few days later a copy of the transcription was given to the testator. 15The cross-claimant gave evidence, which I accept, that on 26 June 2006, he became the licensee of the hotel. Thereafter, until 24 June 2009, he and his wife Saada, managed the hotel. It had been agreed with the testator that they would be paid a combined amount of $100,000 net of tax, and would receive benefits including accommodation at the hotel, fuel, and meals. In fact they were paid a gross amount of $60,000 each, for which they worked long hours. The wages were paid by IWT. In the period from 2008 to early 2009 the testator regularly visited him at the hotel, and expressed his satisfaction at the way the hotel was being run. 16The cross claimant also gave evidence of a conversation in mid 2008 in which the testator said to him: "I am leaving 50/50 to Karen and Kerry of my estate, with 10% to you, and Aunty Pat is still to receive $20,000 until the final payment of her money from the divorce settlement." And: "You have got to be looked after. Your (sic) working hard here and really doing a good job for me so it's only fair that I do something for you." 17The document the subject of the cross-claim contains the following (pages 1 and 2): "To be read in conjunction of (sic) will Dated as per will Dear Karen Kerry & Wayne I wish you to carry out instructions as in will, I know you may not like some instructions but due to the complex financial situation I would like you to make sure Patricia is paid 20000 per month from hotel a/c up and until you sell the hotel where she will be paid $3.350000.00 which should be approximately 50% of value & through your shares in Yenlan & IWT Karen 20% Kerry 20% and on the provision that Wayne manages the hotel for five years or until hotel sold he should receive 10% of hotel. When you receive equal shares from super fund your financial situation is assured please invest fixed term deposit which will give you an income for life. Please treat these funds as your capital as I have worked hard and assuredly for our future. As you would appreciate by continuing the trusts you can aportion profits to a range of beneficiary's. (sic) Trusts distribute but don't pay tax. I would suggest you distribute say $50,000.00 to each of the six grandchildren as they reach a certain age eg 20 years from profits of trusts so as to help minimise your tax obligation. I would suggest distribution to grandchildren be on the proviso of their opening a 1 st house buyers ac which complies with government requirements. This a/c can be added too (sic) by their own initiative. 18Page 3 is headed: "Assets Owned by Yenlan Pinniger Property Trust Discretionary Trust" Beneath are listed a number of properties and the approximate value of each. 19Page 4 is headed: "Assets owned by International Wool Traders Aust Pty Ltd Pinniger Trading Trust Discretionary Trust" Beneath are separately listed IWT's liabilities and assets and the approximate value of each. The assets include items of machinery, shares, and cash in a bank account. 20There is no page 5. Page 6 is headed: "Assets owned by Ian Pinniger & Co Pty Ltd" Beneath are listed assets and the approximate value of each. 21Page 7 is headed: "Ian Pinniger" Beneath are listed the testator's assets and the approximate value of each. They include parcels of real property, horses, golf equipment, shares and cash in a bank account. Included is the following: "XXXX XXXX Road (House) Approx 200 acres Please only sell when zoning changed either by council or (Land & Environment Court) This property if held for subdivision or to develop should fetch For from 2, 3, 4, million" 22Page 8 is headed: "Ian Pinniger & Co Staff Super Fund" Beneath are listed its assets, including shares and real property, and the approximate value of each. 23A statement of agreed facts contained the following: 1. By orders made by consent in the Family Court on 20 June 2007, between Patricia Pinniger, and the late Ian Landseer Pinniger, it was contemplated that, contracts for the sale of the Panaroma City Hotel would be exchanged after 1 July 2007, and that, on settlement of the sale, the late Ian Landseer Pinniger would cause Patricia Pinniger to paid the sum of $3,350,000, plus interest at the rate of 7% per annum on that sum, pending payment (ie: approximately $234,500 per annum/$19,542 per month). 2. In the event, the Hotel was not sold. 3. Between 10/7/2007 and 17/12/2008 (excluding the month of November 2007), and between 15/4/2009 and 15/6/2009, International Wool Traders Australia P/L caused monthly payments of $20,000 to be transferred from its bank account into Mrs. Pinniger's bank account. Between January and March 2009, International Wool Traders Australia P/L caused monthly payments in the sum of $12,200 (Jan), $11,200 (Feb) and $13,125 (Mar) to be transferred into Mrs. Pinniger's bank account. 4. The late Ian Landseer Pinniger maintained a 'Cash Book' in which the expenditure of International Wool Traders Australia P/L over the period 1 July 2007 through 30 June 2008, was documented, quarterly. Pages in the Cash Book are headed "INT Expenditure" (ie: International Wool Traders Australia P/L Expenditure), beneath which, all expenditure is itemised. Each of the monthly payments of $20,000 made to Mrs. Pinniger over that period, are described as "INT LOAN". The principles 24Relevantly, s 8 of the Act provides: 8 When may the Court dispense with the requirements for execution, alteration or revocation of wills? (cf WPA 18A) (1) This section applies to a document, or part of a document, that: (a) purports to state the testamentary intentions of a deceased person, and (b) has not been executed in accordance with this Part. (2) The document, or part of the document, forms: (a) the deceased person's will-if the Court is satisfied that the person intended it to form his or her will, or (b) an alteration to the deceased person's will-if the Court is satisfied that the person intended it to form an alteration to his or her will, or (c) a full or partial revocation of the deceased person's will-if the Court is satisfied that the person intended it to be a full or partial revocation of his or her will. (3) In making a decision under subsection (2), the Court may, in addition to the document or part, have regard to: (a) any evidence relating to the manner in which the document or part was executed, and (b) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person. (4) Subsection (3) does not limit the matters that the Court may have regard to in making a decision under subsection (2). 25The authorities say that once a document is shown to exist, two factors are crucial to the operation of s 8 in relation to it. First, as to the objectively discerned nature of its content, does it purport to state the testamentary intentions of a deceased person, and second, as to the deceased's intentions as to its status and operation i.e. did the deceased intend the document, or part of it, to operate as a will, or as an alteration to it, or as a full or partial revocation of it. Affirmative answers to both questions are necessary for the result that the document operate as an amendment of the will ( Re The Estate of Cropley; Cropley v Cropley [2002] NSWSC 349 at [20]). 26In The Estate of Masters (deceased); Hill v Plummer (1994) 33 NSWLR 446 Kirby P, with reference to s 18A Wills Probate and Administration Act 1898 said (p 452): "Yet by the requirement that the document which, by definition embodies the testamentary intentions of a deceased person, should be described as constituting "his or her will", the legislature plainly drew a distinction between those documents of testamentary intentions which constituted the deceased's will and those which did not." and Mahoney JA said (p 455): "...the document must state the deceased's "testamentary intentions", that is, his wishes or intentions as to how, voluntarily, his property is to pass or be disposed of after his death. ... it is the disposition of the deceased's property voluntarily after his death which is, for present purposes, the relevant characteristic of a will." and Priestly JA said (p 466): "Powell J stated that in the application of this section the questions arising are essentially questions of fact, the particular questions of fact being whether there is a document, whether that document purports to record the testamentary intentions of the deceased and whether it was the intention of the deceased that the document should operate as his or her will. This seems to me to be an appropriate way of understanding the section." 27Thus, for a document to constitute a will it is necessary that it, in terms, sufficiently evidences the fact that by it the deceased intended to govern the disposition of his or her property after death. By s 8(4) of the Act the Court may have regard to extrinsic evidence in deciding the question. Determination 28The crucial question is whether the evidence establishes that at the time the document was brought into existence, or at some later time, the deceased evidence of his intention that the document should, without more, be incorporated with his will. 29The cross claimant submitted that the part relied upon purports to state the testamentary intentions of the deceased. Reliance was placed on the heading "To be read in conjunction of will ... dated as per will". It was put that the words "I know you may not like some instructions ...", "I would like you to make sure Patricia is paid", "he should receive 10% of hotel" are directions or commands to the executors indicative of the testator's intention that the part should operate either as an alteration to, or a partial revocation of, his will. 30It was put that the underlying intention was that the document should be read with the will and take effect on death. It was then submitted that the testator intended the part to form an alteration to his will under s 8(2)(b) of the Act, or a partial revocation, under s 8(2)(c). It was put that this was evident from the terms of the directions given to the executors to provide for Ms Pinniger and the cross claimant. It was put that the intended consequence was that the gift of residue to the plaintiffs under the will would be cut down accordingly. Support was sought from the cross claimant's evidence that the testator had told him he would be left 10% of his estate, and had told the second plaintiff that he had made some provision for the cross claimant from his estate. 31Finally, it was submitted that the effect of the part was to impose an obligation on the plaintiffs as directors and shareholders or Yenlan and IWT, the owners of the premises and business, respectively, of the hotel, to pay the cross claimant an amount equivalent to 10% of the value of the hotel. 32For the plaintiffs the primary submission was that the document did not purport to state the testamentary intentions of the testator, but self evidently demonstrated his intention to confirm his will, and to convey his desires as to the future operation of the trust, and to provide a list of assets and owners for the information of the executors. 33It was also pointed out that the part relied upon by the cross claimant related to property which he knew was not his to dispose of by will. It was also put that the wills of 10 April, and 2 May 2008 demonstrated that had he intended a document to have testamentary effect he would have retained his solicitor to arrange for its preparation and execution. The fact that the document in question was handwritten, unsigned, and informal strongly indicated that it was not testamentary. 34I turn first to consider the circumstances in which the will and the document were made. 35On 10 April 2008 Mr Buckley explained to the testator that assets of the trust were not his to bequeath by his will. He was advised that in order to leave property held by Yenlan to Ms Robinson it would be necessary for it to be transferred out of the trust to him, a transaction which was likely to incur capital gains tax in addition to stamp duty. With regard to that advice, he made a will leaving his estate to the plaintiffs in equal shares. 36After some reflection, on 2 May 2008, the testator, with Mr Buckley's assistance, made the will in which he provided for a monetary gift to Ms Robinson, with the residue of his estate to the plaintiffs in equal shares. The obstacles to transferring a one half share in the hotel to Mrs Pinniger were also discussed, resulting in Mr Buckley's letter to her acknowledging that the Family Law settlement was binding. Shortly afterwards, he gave Mr Buckley the document and asked him to hold it with the will "...so that the girls and Wayne will know what I've got and where everything is". On a later occasion the testator requested Mr Buckley to give him a typed up copy of the document during a conversation in which it was referred to as a list of assets. 37It was agreed that between 10 July 2007 and 15 June 2009 monthly payments, many in the sum of $20,000, were paid to Mrs Pinniger by IWT. During the period 1 July 2007 to 30 June 2008, the testator maintained a cash book which recorded IWT's expenditure, including payments paid to Mrs Pinniger described as "Int Loan". 38The evidence to which I have referred supports the finding, which I make, that at the times when he made his will and also the document, the testator well understood the distinction between his personal property and the assets owned by Yenlan and IWT, and that the latter were not his to dispose of by will. The fact that he made the later will in order to provide for Ms Robinson shows that he was aware of the difficulties and costs involved if he sought to provide for her from trust property. I also find that, by engaging his solicitor to prepare his wills, he regarded it as important that his testamentary intentions be expressed in a formal document drafted and kept by his solicitor. I find it improbable that he would intend an unsigned, informal, handwritten document to operate as a will. 39I now turn to the document itself, with regard to which the part is to be understood. 40The document is addressed to the plaintiffs and cross claimant. It includes a detailed list of the assets of several corporate entities, including Yenlan and IWT. It also includes a list, under his name, of assets owned by the testator. As such it accords with his statement to Mr Buckley that its purpose was to inform his executors of what he had and where everything was. Consistently, the document commences with his instruction: "To be read in conjunction of (sic) will" 41The opening sentence "I wish you to carry out instructions as in will" indicates, in my view, the testator's intention to confirm his will, and to distinguish it from what follows. The matter which follows is expressed, in clear terms, as a request made with regard to what is described as a complex financial situation that provision be made for Mrs Pinniger "from Hotel a/c" and, ultimately, from the proceeds from the sale of the hotel. Also expressed is the wish that the cross claimant should receive 10% "of hotel" subject to a proviso. 42The passage which commences with the words "When you receive equal share from super fund ..." and ending with the words "This a/c can be added too (sic) by their own initiative" is to be reasonably understood as conveying suggestions to the plaintiffs for the management of the trusts and distribution of trust property. Another request was expressed in relation to the sale of the house XXXX XXXX Road which was one of the assets listed under his name. 43It follows from the above that that the testator knew that the assets of Yenlan and IWT were not his to dispose of by will. His testamentary intentions for the disposition of his personal estate are contained in the will. The part of the document relied upon by the cross claimant expressly confirms the will. The remainder of the part, and of the whole, contains no words which indicate an intention to cut down the gifts in his will or to dispose of his estate in any other way. To the contrary, the remainder of the part, in my opinion, demonstrates his wishes in relation to property which he knew was not his to dispose of by will and over which he had no control. It provides no basis for the conclusion that it was intended to have testamentary effect which, being inconsistent with the confirmation, would defeat the intentions expressed in the will. The part amounts to no more than the expression of the testator's hope for what might be done with the trust property after his death. 44For these reasons the intentions as evidenced by the document, particularly by the part, cannot be regarded as testamentary and, accordingly, the document is not one to which s 8 of the Act applies. 45In reaching this conclusion I have not overlooked the evidence of the cross claimant as to his conversation with the testator in about mid 2008 in which the testator said he was leaving him 10% of his estate (para 16 above). Assuming, without deciding, that his account should be accepted, it is apparent that what is claimed to have been said is inconsistent with the terms of the part of the document relied upon. In my opinion the statement attributed to the testator does not indicate that the document was intended to be testamentary. 46Accordingly, I propose to dismiss the amended cross claim, and order that there be a grant to the plaintiffs of probate in solemn form of the will of the late Ian Landseer Pinniger made 2 May 2008. I direct the plaintiffs to prepare short minutes of orders and to deliver same to my associate by 4pm 5 August 2011. 47Failing agreement on the question of costs, the parties have liberty to arrange with my associate by 4pm 5 August 2011 to relist the matter for the purpose of submissions on costs. ********** 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: 29 July 2011