Supreme Court New South Wales Medium Neutral Citation: Peters v Taylor [2017] NSWSC 965 Hearing dates: 18 July 2017 Date of orders: 18 July 2017 Decision date: 18 July 2017 Jurisdiction: Equity Before: Pembroke J Decision: See paragraph [14] Catchwords: WILLS & TRUST – gift of interest in property subject to conditions – non-fulfilment of conditions – no lapsing of gift – equitable obligation to perform Legislation Cited: Conveyancing Act 1919 (NSW) Cases Cited: McEvoy v McEvoy (No 2) [2013] NSWSC 1162 Category: Principal judgment Parties: Mark Ronald Peters – plaintiff Tracey Ann Taylor – defendant Representation: Counsel: S Chapple – for the plaintiff No appearance for the defendant Solicitors: P T Fowler & Sons – for the plaintiff Phillip Taylor – husband of defendant for the defendant File Number(s): 2017/042297 Judgment 1. This is an application by the brother of the defendant for an order that her right to reside in a property at Nelson Street Rozelle pursuant to the will of her grandmother, Jane Beryl Cutler, made on 30 June 2003, has lapsed. 2. The orders which the plaintiff seeks include orders to the effect that her right to reside has lapsed; that an order be made pursuant to Section 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for sale; and that the trustees for sale be empowered and authorised to obtain valuations, building and pest reports, a survey report and to arrange all necessary repairs and maintenance to enable them to offer the property for sale. 3. The plaintiff also seeks an order that upon the property being sold, the trustees distribute the proceeds of sale after the payment of their costs and expenses and all charges and outstanding payments due in respect of the property, to the plaintiff and the defendant equally in their capacity as executors and beneficiaries pursuant to the estate of their grandmother. 4. Finally, the plaintiff seeks an order that his costs be paid out of the estate on the indemnity basis and that they be charged upon the share of the estate to which the defendant would otherwise be entitled. 5. I have concluded that there is a significant degree of overreach in the claim made by the plaintiff. The relevant provision of the will provides: 3. AFTER PAYMENT of all my just debts death duty funeral and testamentary expenses I GIVE DEVISE AND BEQUEATH all my estate of whatsoever sort and wheresoever situate to my Trustee on trust as follows: (a) TO permit my granddaughter TRACEY ANN TAYLOR to reside in my home 37 Nelson Street, Rozelle for a period of Ten (10) years from the date of my death provided that she pays all rates, levies and taxes levied on the said property and keeps the property insured against loss and damage from fire, storm and tempest to an amount and in an insurance company approved by my Executor and that she maintains it in a state similar to that in which it is at my death. 1. The three matters on which the plaintiff relies are unpaid water rates, unpaid council rates and a concern about the insurance over the property. I am satisfied that the water rates have not been paid fully and that the defendant has received a notice of disconnection. In her written submissions, she stated that the outstanding rates are being attended to. There appear to have been some circumstances which suggest that she may not have been fully aware of the fact that the water rates were unpaid. In any event her husband, who appeared on her behalf today pursuant to leave, has informed me that the outstanding rates have been reduced gradually and will be finalised by next Friday, 28 July. I accept the genuineness of his statement. 2. As to the council rates, the defendant's submissions state, and I accept, that they were allowed to go into arrears but that has since been corrected. As to the insurance, the house and property are insured with the NRMA. However, it appears that the defendant may have failed to appreciate that the effect of the will is that both she and her brother are required to approve the terms of the insurance and the identity of the insurer. I see no difficulty whatsoever with the NRMA as the nominated insurer. The defendant's husband informed me that the policy had been sent to the plaintiff's solicitor but I am not in a position to make a finding of fact about that. It seems possible that the insured value of the property has not been increased as time has passed since the death of the testator. 3. Those are the only three matters on which the plaintiff relies for his contention that the right of residence given to the plaintiff should lapse. They are far from sufficient to deprive the defendant of the valuable right given to her pursuant to her grandmother's will. 4. I dealt with the nature of a gift of an interest in property pursuant to a will in McEvoy v McEvoy (No 2) [2013] NSWSC 1162 at [3]. What I said in that case applies equally in this case: The acquisition of an interest in property may, depending on the particular circumstances, be subject to a condition. In some cases, the characterisation of the events, or the construction of the language, giving rise to the creation of the interest in property, may indicate that the very existence of the interest is conditional - with the result that if the condition is not performed, the property interest will fail or be forfeited. In other cases, the condition will be treated as merely creating a personal equitable obligation to fulfil it. In such a case, the obligation may be enforced in equity by an order for compensation, or where appropriate, by a decree of specific performance. 1. I should add that the obligation may also be enforced by any other appropriate order fashioned to meet the particular circumstances of the case. In McEvoy at [4] I added the following further explanation and reference to authority. This difference has been frequently explained. See for example, Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 605-6 (Brennan J) and 624-5 (Dawson J); Williams v Williams [1897] 2 Ch 12 at 19 (Lindley LJ) and O'Sullivan Partners (Advisory) Pty Ltd v Foggo [2012] NSWCA 40 at [96] - [99]. In Gill v Gill (1921) 21 SR (NSW) 400 at 407, Harvey J addressed the difference in the context of a conditional gift pursuant to a will: In some cases the court may see that what the testator intended was to attach a charge or trust upon the property, in other cases it may conclude that a personal liability alone is intended. The view taken would depend on the language used to describe the obligation, the nature of the property given to the obligee, and the nature of the obligation. In cases where the obligation is merely personal in its nature, calling for the personal activity of the obligee it may be the court could not effectively secure its specific performance; there is no reason why, in such cases, the Court should not mould the remedy so as to give a remedy by way of damages for the breach of the [equitable obligation]. 1. This is a case where, properly construed and having regard to the circumstances, it is not appropriate to treat the defendant's right of residence as having lapsed. Her right of residence has not been forfeited by reason of her failure to comply scrupulously with the conditions of the will in relation to the issue of Council rates, water rates and insurance. However, she remains subject to an equitable obligation to fulfil the conditions on which the gift was given to her. I am not at all sure that she has failed to comply in relation to the insurance obligation other than that she has not sought the approval of the plaintiff to the particular policy that has been taken out. 2. The defendant's obligations in relation to water rates and council rates are clear. I will make appropriate orders to ensure that she complies with her outstanding obligations in relation to those matters. I will also make an appropriate order dealing with the insurance. I will not make the orders sought in the summons. 3. I do not think it is appropriate to make the costs order sought by the plaintiff. I will allow the plaintiff to have his costs out of the estate but I will not charge those costs on the defendant's share of the estate. 4. I make the following orders: 1. I order the defendant to pay to Sydney Water all outstanding water rates due in respect of the property known as 37 Nelson Street, Rozelle on or before 28 July 2017. 2. I order the defendant to provide to the plaintiff's solicitor within seven days a copy of the policy with the NRMA over the said property and to ensure that the property remains insured for the balance of the defendant's period of residence in an amount and with an insurance company approved by the plaintiff. 3. I order that the costs of the plaintiff be paid out of the estate on the indemnity basis, such costs to be paid upon the sale of the property whenever such sale occurs. 4. Plaintiff to have liberty to apply. ********** 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: 17 April 2018