Supreme Court New South Wales Medium Neutral Citation: Nomchong v Vey-Cox [2019] NSWSC 1072 Hearing dates: 7 August 2019 Decision date: 21 August 2019 Jurisdiction: Equity Before: Henry J Decision: Held that the conditions in the will to pay rates and other outgoings and keep and maintain the property in good repair give rise to equitable personal obligations, and that non-compliance does not result in the gift lapsing; scope of other obligations determined; parties directed to bring in short minutes. Catchwords: SUCCESSION – wills and estates – construction and effect of testamentary disposition - gift of interest in property subject to conditions – non-fulfilment of conditions – no lapsing of gift – equitable obligations to perform – scope of repair and maintenance condition – purpose of fund created to defray costs associated with trusts Cases Cited: Brooks v Young (2018) 361 ALR 329; [2018] SASCFC 81 Coorey v Coorey (Supreme Court (NSW), Powell J, 22 February 1986, unrep) Estate of Lawrence; Hatzantonis v Lawrence [2003] NSWSC 914 Fell v Fell (1922) 31 CLR 268 Gill v Gill (1921) 21 SR (NSW) 400 Graham v Markets Hotel Pty Ltd (1942) 43 SR (NSW) 98 Hadfield v Hadfield [2010] NSWSC 561 Joliffe v Twyford (1858) SC 28 LJ Ch 93 Lapcevic v Collier [2002] NSWCA 300 Lazar v Williamson (1886) 7 LR (NSW) 98 Lurcott v Wakely & Wheeler (1911) 1 KB 905 McEvoy v McEvoy (No 2) [2013] NSWSC 1162 Muschinski v Dodds (1985) 160 CLR 583 Perpetual Trustees WA Ltd as Executor of the Estate of Henry James Darvell v Darvell & Ors [2001] WASC 123 Perrin v Morgan [1943] AC 399 at 406: Peters v Taylor [2017] NSWSC 965 Re Hotchkys (1886) 32 Ch D 408 Re Sanford [1901] 1 Ch 939 Sidle v Queensland Trustees Ltd (1915) 20 CLR 557 Towns v Wentworth (1858) 14 ER 794 Trustees of the Christian Bros in Western Australia (Inc) v Attorney-General (WA) [2006] WASC 191 White v Arizon Pty Ltd [2003] NSWSC 1051 Category: Principal judgment Parties: Kylie Nomchong (Plaintiff) Delores Vey-Cox (First Defendant) John Vey-Cox (Second Defendant) The Trustee for the Anthony Carroll Discretionary Trust (Third Defendant) Sean Rorie (Fourth Defendant) Danielle Gibbs (Fifth Defendant) Representation: Counsel: S Chapple (Plaintiff) B Adam (First Defendant) Solicitors: Carroll & O'Dea Lawyers (Plaintiff) Merit Lawyers (First Defendant) File Number(s): 2018/365153 Publication restriction: Nil Judgment 1. These proceedings concern the proper construction of the will of the late Dulcie Carroll (the deceased), dated 4 June 2003 (the Will). Probate was granted on 9 June 2005. 2. The plaintiff and the first defendant are co-executors and co-trustees under the Will. 3. The first defendant is a daughter of the deceased. She is also a beneficiary under the Will having received, amongst other gifts, a right to reside for life in the deceased's property located in Ramsgate (Ramsgate property). Her right to reside for life is expressed to be on the condition that she pay rates and other outgoings and keep and maintain the Ramsgate property in good repair during her life interest. 4. The second, fourth and fifth defendants are beneficiaries under the Will. The third defendant is, with the plaintiff, a discretionary trustee under the Will. The second to fifth defendants have not taken an active role in the proceedings. 5. Issues have arisen between the plaintiff and the first defendant as to the nature and scope of the conditions in the Will that apply to the first defendant's interest in the Ramsgate property. This is in the context where council rates for the Ramsgate property have not been paid on time and it is in a state of disrepair. The plaintiff contends that the first defendant's failure in these respects means that her right to reside in the Ramsgate property is now at an end. The first defendant contends otherwise. 6. The summons filed on 27 November 2018 seeks a determination of the proper construction of the Will in seven respects. At the hearing, the parties agreed on a number of the issues raised by the summons for determination. It was also apparent that the issues relate primarily to the position of the first defendant. The parties also accepted that the Court should defer consideration the consequences from its determination as to the nature of the conditions in the Will. 7. Accordingly, the issues for the Court's determination are as follows: 1. whether the conditions in cl 7(b) of the Will that the first defendant pay rates and other outgoings and keep and maintain the Ramsgate property in good repair (repair and maintenance obligation) are conditions subsequent, a breach of which may result in forfeiture of the first defendant's life interest, or personal equitable obligations on the first defendant which are enforceable against her (conditions issue); 2. the scope of the repair and maintenance obligation imposed on the first defendant in clause 7(b) of the Will (repair and maintenance obligation issue); 3. whether the first defendant is obliged, under cl 7(b) of the Will, to pay for expenses associated with the repair and maintenance obligation (payment obligations issue); and 4. the purposes for which the fund of $100,000 established by cl 8 of the Will (cl 8 fund) may be used, and the executor's rights in respect of that fund (cl 8 fund issue). The Will and background to the dispute 1. The Will relevantly contains the following provisions: "7. I GIVE my freehold property at 250 The Grand Parade, Ramsgate together with all furniture and furnishings therein ("the property") to my Trustee upon the following Trusts: (a) for MAXWELL McELROY to reside therein for life on the condition that he shall pay all rates taxes and other outgoings including premiums on any insurance policies and keep and maintain the property in good repair during the existence of his life interest and it is my wish that for so long as the said MAXWELL McELROY shall reside or have the right to reside in the property that my daughter DELORES ANN VEY-COX will also reside therein and share the costs herein referred to: (b) upon the death of the said MAXWELL McELROY or his no longer residing therein for my daughter DELORES ANN VEY-COX to reside therein for life on the condition that she shall pay all rates taxes and other outgoings including any premiums on any insurance policies and keep and maintain the property in good repair during the existence of their life interest; (c) upon the death of the beneficiaries specified in paragraphs (a) and (b) above or them no longer residing in the property for a single continuous period of six (6) months to sell the property and apply the proceeds therefrom after payment of all costs related thereto for the remainder of my estate. 8. I DIRECT mt [sic] Trustee to set aside he sum of one hundred thousand dollars ($100,000) ("the fund") for the purposes of defraying any costs incurred in or associated with the trusts contained in clause 7 above and upon the sale of the property the remainder of the fund shall form part of the residue of my estate. … 23. EACH OF MY TRUSTEES AND THE DISCRETIONARY TRUSTEES may (in furtherance of but subject to any powers otherwise given therein) in their directions:- … (l) maintain, repair, improve, develop, alter, renovate, pull down, erect or re-erect any part of my estate" 1. What follows is a summary of the key events which have led to these proceedings. 2. The deceased died on 22 January 2005. 3. Prior to her death, the deceased resided in the Ramsgate property with Mr McElroy, with whom she had been in a long-term de facto relationship, and the first defendant. 4. Mr McElroy continued to reside in the Ramsgate property with the first defendant until his death on 16 July 2016. The first defendant has remained living in the Ramsgate property since that time. 5. The Ramsgate property is a block of land on which sits a large brick residence with four bedrooms, a timber floor and tile roof. There are a number of outbuildings on the land surrounding the residence, including a garage with attached storage area, a pergola, metal storage sheds, a sauna and storage room and other external buildings used for storage. There is also a swimming pool and an outdoor fishpond. 6. After the deceased's death, the plaintiff (in her capacity as co-executor and co-trustee) arranged for a building inspection and dilapidation report in relation to the Ramsgate property to be prepared by Mr David Hall, of David Hall Building Appraisals Pty Ltd. That report identified the Ramsgate property was in a general state of disrepair and that various repairs needed to be undertaken. 7. From April 2007 to mid-to-late 2012, the plaintiff had a number of discussions with the first defendant regarding the need for ongoing repairs to the Ramsgate property, including works to the front verandah and kitchen. The plaintiff indicated that interest accruing on the cl 8 fund was available to pay for the works. The evidence indicates that the works were not carried out by the first defendant or Mr McElroy. 8. In late 2012, while the first defendant was in hospital, the fifth defendant instigated some repairs and maintenance to the Ramsgate property which were approved by the plaintiff and funded by the interest earned on the cl 8 fund. These works included cleaning the inside surfaces of the swimming pool and engaging a contractor to paint, garden and clear away rubbish and to undertake ongoing pool maintenance. 9. The plaintiff raised the state of the disrepair of the Ramsgate property with the first defendant after she was discharged from hospital. The plaintiff then called a meeting of executors and beneficiaries, including the first defendant, on 2 February 2013. The minutes of that meeting record that the parties accepted that the Ramsgate property was in a very poor state of repair and that the first defendant and Mr McElroy could use the interest accruing on the cl 8 fund for the purposes of effecting repairs and maintenance. 10. On 8 April 2015, the executors and beneficiaries held another meeting. The minutes of that meeting record the plaintiff asking the first defendant to provide copies of receipts and invoices to identify the nature of any repairs and maintenance undertaken on the Ramsgate property since 2005. They also note the first defendant agreeing to obtain a quote from a structural engineer about renovations needing to be undertaken to the front verandah. No receipts, invoices or quotes were forthcoming from the first defendant. 11. On 10 December 2015, the executors and beneficiaries held a meeting at which the beneficiaries resolved that it was unnecessary for any further repairs or maintenance work to be done on the Ramsgate property. This was for the reason that the Ramsgate property would likely be demolished for future development (repairs moratorium). The minutes of that meeting record the executors and beneficiaries agreeing to Mr McElroy and the first defendant continuing to live at the Ramsgate property until they vacated, either by moving out or upon their death. 12. On 16 July 2016, as noted earlier, Mr McElroy died. 13. In late 2017, the first defendant arranged to have the front verandah of the Ramsgate property demolished and replaced. She then sent an invoice for $13,900 to the plaintiff seeking reimbursement. The plaintiff refused to pay that amount based on the repairs moratorium. 14. In April 2018, the plaintiff discovered that the Bayside Council rates for the Ramsgate property were more than two years in arrears and a statement of claim for their recovery had been issued on 8 March 2018 against the plaintiff and the first defendant as the registered proprietors of the Ramsgate property. The plaintiff later found out that Bayside Council had commenced other legal proceedings in respect of the non-payment of rates relating to the Ramsgate property in 2013 and 2016 against the plaintiff and the first defendant. Understandably, the plaintiff was very concerned about the first defendant's failure to pay council rates on time and not informing her of the legal proceedings in which she was named as a defendant. 15. The plaintiff contends that the repair moratorium ended on 10 April 2018 as a result of the beneficiaries and executors meeting that took place on that day. 16. On 20 June 2018, Mr Hall prepared an updated building inspection and dilapidation report, which confirmed that the Ramsgate property remained in disrepair. 17. As at the date of the hearing, it was agreed that all outstanding council rates in respect of the Ramsgate property had been paid. Legal principles 1. To construe a will, the Court must look to the whole of the instrument before arriving at an opinion as to the meaning of any particular part: Sidle v Queensland Trustees Limited (1915) 20 CLR 557 at 560-561; Fell v Fell (1922) 31 CLR 268 at 274. 2. The Court's first task is to ascertain the basic scheme that the testator conceived for dealing with his or her estate by considering the language used in the will in that context, reading the will as a whole, and giving effect to the scheme so revealed: Coorey v Coorey (Supreme Court (NSW), Powell J, 22 February 1986, unrep) at [19]; Towns v Wentworth (1858) 14 ER 794; Perrin v Morgan [1943] AC 399 at 406. 3. As noted by the Court in Towns v Wentworth (1858) 14 ER 794 at 800: "The rules of construction…do not seem open to any doubt. In order to determine the meaning of a will, the court must read the language of the testator in the sense which it appears he himself attached to the expressions which he has used, with this qualification, that when a rule of law has affixed a certain determinate meaning to technical expressions, that meaning must be given to them, unless the testator has by his will excluded beyond all doubt, such construction. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with such intention, though not sufficient to control it, or which indicate an intention which the law will not permit to take effect, such expressions must be discarded or modified; and, on the other hand, if the Will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has on the whole will, sufficiently declared." See also Perpetual Trustee Co Ltd v Wright and Ors (1987) 9 NSWLR 18 at 32-33 and Estate of Lawrence; Hatzantonis v Lawrence [2003] NSWSC 914 at [6]. 1. The testator's intention is to be gathered from the language of the will read in light of the circumstances in which the will was made. To understand the language employed, the Court is entitled to sit in the "testator's armchair": Perrin v Morgan [1943] AC 399 at 420. 2. The Court should start by considering the will and forming an opinion, rather than by first looking to other decisions and considering how far the will in question resembles other wills upon which decisions have been given: Re Sanford [1901] 1 Ch 939 at 941. Conditions issue 1. The scheme of the Will provides for the Ramsgate property to be held by the trustees on trust for the benefit of Mr McElroy and then the first defendant to enable them to reside in it for their lifetime (life interests): cl 7(a) and cl 7(b) of the Will. After Mr McElroy and the first defendant die or cease to live in the Ramsgate property, the trustees are to sell the Ramsgate property and apply the net proceeds to the remainder of the deceased's estate: cl 7(c) of the Will. 2. The first trust comprises the life interest to the benefit of Mr McElroy which came into existence after the deceased's death: cl 7(a) of the will. Mr McElroy's life interest is expressed to be on the condition that he do certain things in respect of the Ramsgate property (such as pay rates and keep and maintain it in good repair). It also includes the expression of the deceased's wish that the first defendant also reside in the Ramsgate property during the period of Mr McElroy's life interest. 3. The second trust created is a life interest to the benefit of the first defendant which is expressed to commence "upon the death of the said Maxwell McElroy or his no longer residing therein": cl 7(b) of the Will. As events happened, Mr McElroy continued to reside in the Ramsgate property with the first defendant until his death: affidavit of Kylie Nomchong dated 27 November 2018 at [35]; annexure KN-25 to affidavit of Kylie Nomchong dated 27 November 2018. In my view, it follows that the first defendant's life interest under cl 7(b) commenced on Mr McElroy's death, and not earlier. It did not commence while the first defendant was living in the Ramsgate property with Mr McElroy immediately after the deceased's death (presumably in accordance with the expression of the wish in cl 7(a)). 4. Similar to cl 7(a), the first defendant's life interest is expressed to be on the condition that she pay rates and other outgoings, and keep and maintain the Ramsgate property in good repair during her life interest. 5. The question is whether the conditions imposed on the first defendant's life interest are conditions subsequent, which might lead to her life interest coming to an end for breach. Alternatively, are they conditions in the nature of personal equitable obligations which might be enforced against her (such as by way of equitable compensation or specific performance), where non-performance would not result in forfeiture of her life interest? 6. Plaintiff's counsel submits that they are conditions subsequent. He relies on the plain and express words in clause 7(b) which refer to the right to reside being "on the condition" that the first defendant pay rates and other outgoings and keep and maintain the Ramsgate property in good repair. Plaintiff's counsel also points to the use of the word "wish". He submits that word indicates the deceased intended there to be different consequences flowing from the condition and the wish, with the wish creating an equitable personal obligation on Mr McElroy to allow the first defendant to continue to reside in the Ramsgate property, akin to the situation in Gill v Gill (1921) 21 SR (NSW) 400 (Gill v Gill). 7. I do not accept the plaintiff's submission and have concluded that the conditions specified in cl 7(b) give rise to personal equitable obligations that the first defendant is required to discharge. This is for the following reasons. 8. In considering what the deceased intended and when construing the conditions, the Court should look to the language used to describe the obligation, the nature of the property given to the first defendant and the nature of the obligation: Gill v Gill at 407. 9. The use of the words "on the condition" makes clear that the deceased intended the first defendant to be legally obliged to pay rates and other outgoings and keep and maintain the Ramsgate property in good repair as a consequence of her being gifted her life interest. 10. I accept that the words "on the condition" might also suggest a legal obligation which, if not met, may give rise to the life interest given to the first defendant coming to an end. The word condition is a term which has particular meaning in certain legal contexts. But this is a will, not a commercial contract, and conditions attaching to gifts in wills have been recognised as falling into two classes of legal obligations. The first class comprises conditions that result in forfeiture of the asset if the condition is not discharged. The second class comprises conditions that create equitable personal obligations. In the second class, failure to discharge the obligation may give rise to remedies and be enforced in equity by an order for compensation, or where appropriate, a decree of specific performance, but does not give rise to forfeiture: Muschinski v Dodds (1985) 160 CLR 583 at 605-6; McEvoy v McEvoy (No 2) [2013] NSWSC 1162 at [3]; Gill v Gill at 406. 11. The use of the words "on the condition" must be read in the context of the scheme of the Will being for the Ramsgate property to be held on trust for the benefit of Mr McElroy and then the first defendant, who were granted rights to reside for life. In a number of places, their right to reside for life are expressed to be life interests: cls 7(a) and 7(b). The words must also be read in the context where the Will provides for the trustees to sell the Ramsgate property for the benefit of the remainder of the estate after the death of Mr McElroy and the first defendant or them not residing there continuously for six months: cl 7(c). 12. Those contexts do not suggest an intention on the part of the deceased that the words "on the condition" should be construed in a way which negates the benefit of a life interest or that non-performance of her obligations could give rise to that gift for life lapsing. 13. The Will is silent as to what would occur if the first defendant (or Mr McElroy) fails to comply with the conditions. Nor does its scheme and language suggest (other than by the words "on the condition") that the first defendant's right to reside for life could come to an end other than in the circumstances set out in cl 7(c) or be forfeited at all. 14. If the deceased intended the first defendant's legal obligations to pay rates and outgoings and keep and maintain the Ramsgate property in good repair to operate as conditions subsequent, it might be expected that she would have included some statement to that effect or used words which acknowledge the prospect of failure to comply resulting in the gift lapsing. There are none. This is noteworthy in a will containing twenty-four clauses, some of which provide detailed instructions as to how the deceased's estate is to be managed and dealt with. The instructions include cl 7(c) of the Will, which specifies the circumstances in which the trustees are required to sell the Ramsgate property. The beneficiaries' failure to comply with the conditions is not one of these circumstances. 15. As to the nature of the conditions imposed, the requirement to pay rates, taxes and other outgoings, including insurance premiums, is an obligation that may be easy to identify for the purposes of ascertaining a breach. 16. The scope of the condition requiring the first defendant to keep and maintain the Ramsgate property in good repair is less clear. It is harder to identify in advance with reasonable certainty the circumstances in which forfeiture of the gift would occur, or to ascertain breach after the event, as the debates in these proceedings have shown. This is also relevant to the construction of the obligation given the requirement for certainty that applies to conditional gifts and enforcement of conditions subsequent: Gill v Gill at 407; Perpetual Trustees Executors and Agency Company of Tasmania Limited v Walker (1953) 90 CLR 270 17. The plaintiff's submission that they are conditions subsequent proceeds on the basis that any breach of either obligation, however trivial, would result in the trustees being able to assert that the first defendant's life interest has lapsed. The first defendant would then have to contest that position, possibly be seeking relief against forfeiture. In my view, that outcome is not consistent with the scheme of the Will, which was to provide the first defendant with the benefit of accommodation for life. 18. Given the first defendant's relationship with the deceased and she had lived at the Ramsgate property most of her life, I am also of the view that it is very unlikely the deceased intended that any failure by the first defendant to pay rates or undertake works to keep and maintain the Ramsgate property in good repair would give rise to a risk that she would lose her life interest. 19. Another relevant matter is that the Will requires the trustees to set aside the cl 8 fund to defray any costs incurred in or associated with the trusts in cl 7. While concluding there are limits as to how the cl 8 fund should usually be applied (see later in these reasons), its very existence indicates that the deceased intended there to be available to the trustees funds which might be utilised in a range of circumstances relating to the trusts under cl 7. Those circumstances might include necessary funding where the conditions have not been met by the first defendant (and previously Mr McElroy). This also suggests the deceased did not intend for failure to comply with her obligations under cl 7(b) to result in the gift to the first defendant coming to an end. 20. As to the submission made by plaintiff's counsel regarding the use of the words "condition" and "wish" in cl 7(a) of the Will, I agree that their use indicates that the deceased intended there to be different consequences flowing from each as distinct concepts. I do not agree that they lead to the conclusion the conditions are in the nature of conditions subsequent. I also do not accept that the expression of the wish created an equitable personal obligation on Mr McElroy to allow the first defendant to continue to reside in the Ramsgate property, akin to the situation in Gill v Gill at 407. 21. There are some circumstances in which precatory words can create legal rights and obligations; for example if an expression of a wish in a will, read in context, indicates that the testator's clear intention is that it be legally enforceable: Trustees of the Christian Bros in Western Australia (Inc) v Attorney-General (WA) [2006] WASC 191, at [11]. 22. In my view, when read in context, the deceased's expressed wish in cl 7(a) was not legally enforceable to the benefit of the first defendant. Nor did it create any obligation on her to share the burden of the costs if she was living there. 23. The use of the word "condition" in cl 7(a) indicates an intention on the part of the deceased to create legal obligations on Mr McElroy in respect of the payment of rates and repairs (as cl 7(b) does in respect of the first defendant). 24. By contrast, the use of the word "wish" lacks the imperative required to create a legally enforceable obligation. It is more akin to an expression of a hope on the part of the deceased that the first defendant would continue to reside at the Ramsgate property and share the costs for which Mr McElroy was responsible during his life interest. If the deceased had intended to create an enforceable obligation, she could have used the words "on the condition" again or some other commanding language, as she has in other parts of the Will: see for example, cl 8 which states "I direct mt [sic] Trustees to set aside"; cl 9 which states "I give the whole of the rest and residue of my estate". She did not, and instead used the word "wish". 25. The case of Gill v Gill does not, in my view, assist the submission made by plaintiff's counsel that the wish was a personal equitable obligation enforceable against Mr McElroy. That case construed a will under which a property was bequeathed to a son "on condition" that he made certain parts of the property available to his sisters for life. The Court construed that condition as giving rise to a personal equitable obligation on the son's part which his sister could enforce against him. The Court in Gill v Gill did not consider it to be an enforceable wish or a condition subsequent which would have led to forfeiture of the son's interest in the property upon his failure to comply. The case also confirmed that property given to a beneficiary on condition that they should pay certain liabilities creates a quasi-contractual relationship which may be enforceable against the beneficiary by the personal representative of the testator: at 406. 26. The creation of the second life interest to the benefit of the first defendant in cl 7(b) also supports an interpretation that the purpose of the wish in cl 7(a) was not to create an obligation to provide a right to reside in the Ramsgate property that could be enforced by the first defendant against the trustees or Mr McElroy. Rather, it was an indication of what the deceased hoped to happen during the period of Mr McElroy's life interest. If it did happen, her occupancy could conceivably have been terminated by Mr McElroy. 27. Put another way, if the deceased had intended for the first defendant to have the benefit of an enforceable obligation against Mr McElroy or the trustees to enable her to live at the Ramsgate property and require her to share the costs with Mr McElroy, she could have created a life interest in favour of the first defendant which commenced at the same time as Mr McElroy's and continued after his death. She chose not to. Instead, she devised a scheme which created, in cl 7(b), a second life interest to the first defendant's benefit which commenced (as events transpired) on Mr McElroy's death. It did not commence while the first defendant was living in the Ramsgate property with Mr McElroy after the deceased's death. 28. Accordingly, the use of the words "on the condition" are not sufficient to conclude that the interests gifted to Mr McElroy under cl 7(a) and then to the first defendant under cl 7(b) are subject to conditions subsequent, performance of which are required for their life interests to subsist. Rather, on a true construction of the Will and in light of the factual circumstances, I conclude that the first defendant's right to reside created by cl 7(b) of the Will is subject to conditions which are in the nature of personal equitable obligations imposed on her in the terms specified. 29. I have come to this conclusion based on my construction of the Will. That said, the authorities I was referred to by the parties are consistent with my conclusion. 30. While some of the authorities relate to wills which include language that may be considered to be slightly more equivocal than "on the condition" (such as "she paying all", "so long as during her lifetime…she being liable" or "provided that she pays"), they recognise that a condition imposed on a beneficiary in a will to do something like pay rates or keep a property in repair may be a personal equitable obligation, as distinct from a condition subsequent: see Perpetual Trustees WA Ltd v Darvell & Ors [2001] WASC 123; Hadfield v Hadfield [2010] NSWSC 561; Peters v Taylor [2017] NSWSC 965. Those cases are to be contrasted with others in which the Court considered wills that expressly provided for forfeiture (or the risk of forfeiture) in the event there was non-compliance with the relevant condition or obligation: see for example, White v Arizon Pty Ltd [2003] NSWSC 1051; Joliffe v Twyford (1858) SC 28 LJ Ch 93. 31. I was not taken to any authority in which the Court held that a will with a condition in similar terms to that imposed on the first defendant in this case, was a condition subsequent breach of which gave rise to forfeiture of the life interest. 32. As noted at the hearing, I have deferred the question of any breach of the first defendant's personal equitable obligations under cl 7(b) of the Will and the consequences that might flow as the parties wished to consider these reasons. 33. As I have found the conditions are personal equitable obligations, and as agreed at the hearing, I have not dealt with the question of whether the first defendant's right of residence has ended due to breach of the first defendant's obligations, being conditions subsequent. It seems appropriate, however, to record that I have some doubts that the circumstances of this case would lead to the conclusion that the first defendant's life interest should be treated as having ended. This is in the context where the evidence suggests the trustees and other beneficiaries did not take steps to enforce any breach against Mr McElroy while he was alive, the first defendant's life interest in the Ramsgate property should be construed as having commenced on 16 July 2016 while the repairs moratorium was in place, and all Council rates have now been paid. Repair and maintenance obligation issue 1. The second issue for determination is what, on the true construction of the Will, is the scope of the obligation on the first defendant under cl 7(b) of the will to "keep and maintain the property in good repair" during the existence of her life interest. 2. As the hearing went on, it became apparent that there was little difference between the plaintiff and the first defendant on this issue. They both accept that the repair and maintenance obligation: 1. is informed by the condition of the Ramsgate property having regard to its age, character and ordinary use, adjudged at the commencement of the life interest provided for under the will: T21:15-20, T52:39-43; 2. does not extend to undertaking substantial structural repairs or renovations, or to replacing or remodelling those parts of the Ramsgate property that were subject to defects at the time she obtained her life interest: T25:17-20; T42:34-37; and 3. continues throughout the existence of her life interest: T55:35-40; T75:23-26. 1. The difference between the parties is whether the first defendant's obligation might require some form of renewal and fixing of parts of the Ramsgate property and bringing up to a standard of good repair. Plaintiff's counsel submits that it does. The first defendant's counsel submits that it does not. He contends that the obligation only requires maintenance and repairs to precisely the same standard of repair that the Ramsgate property was in at the date the first defendant obtained her life interest. 2. I am persuaded by the plaintiff's submission on this issue and accept that the repair and maintenance obligation in cl 7(b) should be construed as requiring some form of fixing and element of renewal. 3. As plaintiff's counsel submits, the words used in cl 7(b) are "keep and maintain in good repair", rather than to keep and maintain "in repair", and the word "good" must have some work to do. 4. In my view, the use of the word "good" means that works are required to be undertaken which might result in parts of the Ramsgate property being fixed and renewed, or brought up to a standard that is better than the standard which was in existence at the time the first defendant's life interest commenced. That does not mean the works have to lead to any overall improvement to the Ramsgate property or repairs have to be undertaken to a much better standard or quality. As the plaintiff's counsel submits, it is a question of degree. The degree that applies can be assessed by reference to works of the type discussed at the hearing. For example, the obligation under cl 7(b) would extend to fixing a leak in the roof of the Ramsgate property and renewing the area of the roof where the leak was located with new tiles, but may not extend to replacing and improving the whole of the roof. 5. The first defendant's acceptance of items put forward by the plaintiff as work that should be done to keep and maintain the Ramsgate property in good repair in accordance with cl 7(b) of the Will supports the plaintiff's construction. The full list items of repair and maintenance work which the first defendant accepts she should carry out (T58:1-50; T79:18-50; T80:1-31) are: "(a) Repainting the inside of the house; (b) Repainting the exterior of the house, including fascia and gutters; (c) Inspection of electrical wiring and making such repairs as are necessary to ensure that the property is safe for occupation; (d) Take such steps as are possible to reduce dampness to the walls behind the shower (short of replacement), and repair to any damage to wallpaper and painting in the adjoining bedroom; (e) Proper repair of carpet in the main building; (f) Repair of kitchen (short of replacement), but including repair of broken doors and drawers; (g) Replacing the front garage door; (h) Replacement of affected parts of the floor in Room 6 of the outbuilding near to the garage; (i) Continuing maintenance of the pool; (j) Replacing the roof sheets in the covered barbecue area; and (k) Replacement of curtains and blinds." 1. Carrying out the work listed above will inevitably involve some form of renewal and bringing up to a standard of repair which may be different (and better) to the standard of that which was in existence at the time the first defendant obtained her life interest in the Ramsgate property. For example, the evidence indicates that the paint on parts of the inside of the house was peeling and that this issue had not been rectified as at 12 June 2018: annexure KN-42 to affidavit of Kylie Nomchong dated 31 July 2019. It also indicates that some kitchen doors were loose and have now fallen off entirely: affidavit of Kylie Nomchong dated 27 November 2018 at [22.12]; annexure KN-42 to affidavit of Kylie Nomchong dated 31 July 2019. 2. If the first defendant's submission is to be accepted that work only needs to be undertaken to precisely the same standard of original repair of the Ramsgate property, then the work to be undertaken would be to the standard of peeling paint and loose kitchen doors. Those outcomes are not, in my view, consistent with the terms of the repair and maintenance obligation in cl 7(b). Nor are they consistent with what the first defendant ultimately accepted at the hearing. That said, the work to be undertaken to comply with the repair and maintenance obligation under cl 7(b) would not require the painting to be done in a way which significantly improves the overall standard of painting inside the Ramsgate property or require much improved kitchen doors. For example, it may not require an undercoat and three coats of paint if no undercoat and only two coats of paint had been used previously, nor would it likely require soft close, lockable laminate kitchen doors if they had previously been older style wooden latch doors. 3. In support of his submission, plaintiff's counsel also relies on commercial leasing cases which provide guidance on the meaning of the terms 'keep', 'maintain and 'good repair' in repair covenants. Those cases support the following propositions: 1. when used on its own, repair usually means to 'fix': Lapcevic v Collier [2002] NSWCA 300; 2. the words 'good repair' may require an element of renewal, and repair is restoration by renewal or replacement of subsidiary parts of a whole: Lurcott v Wakely & Wheeler (1911) 1 KB 905; and 3. where a property is not in good repair at the relevant time, a covenant to keep and maintain the property in good repair may involve bringing the property up to some standard that constitutes good repair, some element of renewal and the maintenance of the structure subject to the defects so far as it can be affected by repair: Lazar v Williamson (1886) 7 LR (NSW) 98, Graham v Markets Hotel Pty Ltd (1942) 43 SR (NSW) 98. 1. Counsel for the first defendant submits that the Court should not look to commercial leasing cases for guidance. He says the Court should limit its consideration to cases which consider repair obligations in the context of will construction suits, such as Joliffe v Twyford (1858) SC 28 LJ Ch 93 and Dashwood v Magniac [1891] 3 Ch 306. Those cases considered directions under a will to "keep in complete repair" and "keep in good and substantial repair, order and condition". 2. I do not accept the first defendant's submission that it is inappropriate for the Court to have regard to the commercial leasing cases relied on by the plaintiff. They are instructive. They are consistent with the principles applied in the will construction cases relied upon by the first defendant. They are also consistent with the position agreed between the parties that the repair and maintenance obligation under cl 7(b) of the Will is to be determined by reference to its state and condition at the time the first defendant commenced her life interest. 3. At the hearing, the first defendant's counsel also contended that her obligation under clause 7(b) to keep and maintain the Ramsgate property in good repair only extends to "day to day ordinary repairs that would have been within the scope of an 82-year-old with her assets", "less expensive, moderate…ordinary" repairs, "to the extent they could be carried out physically", and "not expensive repairs, not big-ticket items": T45:11-12 and 28; T47:19-22; and T49:30. Those submissions were largely overtaken by the first defendant's acceptance of the items listed at [70] above and are also relevant to the payment obligations issue below. 4. In any event, there is nothing in the Will that supports an interpretation that the repair and maintenance obligation in cl 7(b) only extends to what the first defendant can physically carry out. I also do not accept the first defendant's submission that the repair and maintenance obligation in cl 7(b) should be defined by reference to what might be considered to be "day to day" or "ordinary" repairs. Work of an irregular or unusual nature, such as repainting the outside of the Ramsgate property or repairing a leak to a roof, may need to be undertaken during the course of the first defendant's life interest to keep and maintain the Ramsgate property in good repair. 5. Accordingly, I have concluded that the plaintiff's position as to the proper construction of the first defendant's repair and maintenance obligation under cl 7(b) is correct, subject to the following qualification. 6. Relevantly, and consistent with my conclusion on the conditions issue, the first defendant's life interest commenced on 16 July 2016, being the date of Mr McElroy's death: cl 7(b) of the will. It did not commence upon the deceased's death or during the period while both the first defendant and Mr McElroy resided in the Ramsgate property together. 7. What follows is that the first defendant's repair and maintenance obligation arose, not when she commenced (or continued in) occupation of the Ramsgate property after the deceased's death, but on 16 July 2016 when her life interest under cl 7(b) commenced. While the first defendant resided in the Ramsgate property with Mr McElroy before his death, only Mr McElroy was bound by the repair and maintenance obligation: cl 7(a) of the Will. The terms of the deceased's wish in cl 7(a) may have created an expectation that the first defendant would share the costs with Mr McElroy but did not, in my view, create a personal equitable obligation enforceable against the first defendant. 8. The date of 16 July 2016 is relevant as it informs the date upon which regard should be had to the age, character, state of repair and ordinary use of the Ramsgate property for the purposes of assessing the scope of the first defendant's repair and maintenance obligation under cl 7(b) of the Will. It may also have practical implications for any assessment as to the extent of the maintenance and repair works that the first defendant should have undertaken to date, and the consequences of any breach, particularly in the context where the repairs moratorium was in existence from 10 December 2015 to 10 April 2018. Payment obligations issue 1. The first defendant accepts that she is obliged to pay the rates, taxes and other outgoings, including premiums on any insurance policies, in respect of the Ramsgate property pursuant to cl 7(b) of the Will. 2. Based on my earlier conclusions, the first defendant's obligation to pay rates and other outgoings arose on 16 July 2016 and is a personal equitable obligation that is enforceable against the first defendant by the plaintiff, as co-executor and co-trustee. 3. The issue to be determined is whether the first defendant is also obliged to pay for the cost of complying with the maintenance and repair obligation in cl 7(b) of the Will. 4. Plaintiff's counsel submits that the first defendant is obliged to pay those costs. The first defendant's counsel contends that the costs should be paid from the interest accruing on the cl 8 fund, and not by first defendant herself. That said, the first defendant's counsel appeared to accept that it was the first defendant's obligation to pay if there was no interest available to fund the costs of complying with the repair and maintenance obligation under cl 7(b): T54:25-35. 5. There is a degree of ambiguity as to whether the first defendant is obliged to pay the costs of complying with the repair and maintenance obligation as cl 8 of the Will creates a fund which is expressed to be for "the purposes of defraying any costs incurred in or associated with the trusts contained in clause 7 above". Some ambiguity also arises because cl 7(b) states that the first defendant "shall pay all rates taxes and other outgoings", but does not state "and shall pay to keep and maintain the property in good repair". 6. Notwithstanding these ambiguities, I have concluded that, on a proper construction of the Will, the first defendant is obliged under cl 7(b) to pay for the costs to keep and maintain the Ramsgate property in good repair, as well as to pay for rates and other outgoings. 7. I accept the plaintiff's submission that the first defendant's repair and maintenance obligation under cl 7(b) of the Will includes the costs of doing so and should not be read as limited to obliging the first defendant to arrange for the maintenance and repairs only. To interpret the obligation in that limited way would render almost meaningless the personal equitable obligation on the first defendant in respect of repairs and maintenance. It would also practically require the trustees to take on obligations which the deceased saw fit to impose, by express words in the Will, on the first defendant during her life interest in the Ramsgate property. 8. The cl 8 fund is to be set aside by the trustees and expressed to be for purposes which are non-specific other than relating to the cl 7 trusts. But in the context of the overall scheme of the Will, the cl 8 fund is to make available to the trustees funds to pay for the costs of the trusts created under cl 7 for which they are responsible. 9. The cl 8 fund was not created to fund expenditure for which the first defendant (and previously Mr McElroy) is responsible. To construe the purpose of the cl 8 fund and any interest accruing on it otherwise (as contended by the first defendant's counsel) would, in my view, fail to give effect to the express language of cl 7(b) of the Will. That language makes it plain that it is the first defendant's obligation to keep and maintain the property in good repair. That obligation includes a responsibility for paying the costs of doing so. Clause 8 fund issue 1. The final issues concern the purposes for which the cl 8 fund may be used, what discretion the executors and trustees have to make payments from the cl 8 fund and, whether any payments made by the trustees from the cl 8 fund on behalf of the first defendant can be charged against or deducted from her share of the residue of the deceased's estate to which she or her estate are entitled under cl 10(a) of the Will. 2. There was some agreement between the parties as to the purposes of the cl 8 fund. 3. They accept that it may be used by the trustees to pay the costs of and incidental to the administration of the trusts established under cl 7 of the Will. They also accept it may be used to pay for the costs of work to the Ramsgate property that do not otherwise fall within the scope of the first defendant's repair and maintenance obligation under cl 7(b) of the Will. That is, it may be used to pay for any improvements, renovations, replacement items, dealing with structural defects or undertaking significant or substantial repairs to the Ramsgate property: T67:10-26. 4. The plaintiff and first defendant also agree that the cl 8 fund should not be used to pay rates and other outgoings in respect of the Ramsgate property during the period of the first defendant's life interest, or the costs associated with the sale of the Ramsgate property, which costs are dealt with in cl 7(c) of the Will: T67:28-50. 5. The issues between the plaintiff and the first defendant relate to whether the interest on the cl 8 fund, and the fund itself, should be used to pay the costs of the first defendant complying with her repair and maintenance obligation under cl 7(b) of the Will. 6. The first defendant's submits that interest on the cl 8 fund is available to defray the costs of complying with her repair and maintenance obligation. I accept that it may be open to the trustees to make that interest available for that purpose if they choose to do so. I do not accept that the trustees are obliged to, or that the first defendant is entitled to have access to that interest as a matter of course to pay for expenses incurred by her in meeting her repair and maintenance obligation under cl 7(b). There is nothing in the Will which indicates that interest accruing on the cl 8 fund (as distinct from the fund itself) should be used for that purpose. 7. Further, the first defendant's contention that the interest on the cl 8 fund must be used to pay for the costs of meeting her repair and maintenance obligation is inconsistent with her acknowledgment that she is responsible for paying for rates and other outgoings without recourse to the interest on the cl 8 fund. The language of cll 7(b) and 8 of the Will do not support a construction that the first defendant is entitled to utilise interest on the cl 8 fund to meet one of her obligations under cl 7(b) but not the other. 8. The first defendant's counsel also makes a submission that the cl 8 fund is to pay for costs incurred in respect of works which fall within the scope of the first defendant's obligation under cl 7(b) but which the first defendant cannot afford. He submits that the cl 8 fund should not be used exclusively for the benefit of the remaindermen of the estate having regard to the deceased's awareness of the limited means of the first defendant (and Mr McElroy), the closeness of the deceased's relationship with the first defendant (and Mr McElroy) and the substantially deteriorated condition of the Ramsgate property at the time of her death. 9. I accept that the relationship between the deceased and the first defendant (and Mr McElroy) was likely to have been very close. Presumably, that is why the first defendant received her life interest in the Ramsgate property and significant other gifts under the Will, including one of four equal shares of the residue of the estate. 10. I also accept that repairs and works to the Ramsgate property which do not fall within the scope of the first defendant's obligations under cl 7(b) of the Will may provide some benefit to the remaindermen, although I assume they may also provide a benefit to the first defendant if it improves her living conditions. However these factors do not provide a basis to excuse the first defendant from complying with her express obligations under cl 7(b) of the Will and pay for rates and other outgoings and necessary works. 11. If the deceased intended the first defendant not to have to pay for expenses associated with the Ramsgate property which the first defendant could not afford, the deceased could have qualified the first defendant's obligations in cl 7(b) in that way. She chose not to. I do not consider the existence of the cl 8 fund, in the context of the other provisions of the Will, provides a basis for reading down the scope of the first defendant's obligations to pay for only the rates, other outgoings, maintenance and repair works that she personally can afford. Such a construction would also be difficult to apply given the subjective nature of what might be considered to be an expense which the first defendant can or cannot afford. 12. That said, I consider it open to the trustees and executors to utilise the cl 8 fund (and any interest which has accrued) in the event the first defendant does not comply with her cl 7(b) obligations. In my view, the use of the words "defraying any costs" indicates an intention on the part of the deceased that the cl 8 fund may be used by the trustees to help pay for any costs associated with the cl 7 trusts, which might include those for which the first defendant is responsible under cl 7(b). In practice, such a situation may arise where the first defendant cannot afford to pay (or asserts that she cannot). It any also arise, as has happened in this case, if she fails in the future to pay rates or undertake works in accordance with her obligations under cl 7(b) of the Will. Based on my reasoning below, the trustees have discretion whether to utilise the cl 8 fund, and any interest, for that purpose and may choose not to do so. 13. As to whether the cl 8 fund may or must be used for the purposes to which I have referred above, I accept the plaintiff's submission that the correct construction is that it may be used for those purposes. I do not consider that the trustees and executors are positively obliged to put the fund to those uses. 14. The first defendant's counsel contends that the trustees have a positive obligation to undertake repairs and must use the cl 8 fund to pay for them, relying on the principles in Re Hotchkys (1886) 32 Ch D 408 (Re Hotchkys). In that case, the Court concluded that the trustees had an obligation in respect of estate property vested in them during the tenancy for life of the beneficiary to see that the property did not fall into decay from want of proper repair. 15. The position in Re Hotchkys is different to the position in this case. In Re Hotchkys there was no obligation on the beneficiary to keep and maintain the property in good repair (as there is in this case), and so it was up to the trustees to do so. The Court in Re Hotchkys also recognised that the trustees had discretion to incur the cost of undertaking repairs. As Cotton LJ noted at [417], "when the property has fallen into bad repair, the question will of course arise whether it is worthwhile to do the repairs". 16. Whether any other works (over and above the first defendant's repair and maintenance obligation) should be undertaken at the Ramsgate property and paid for out of the cl 8 fund is, in my view, at the discretion of the trustees and executors. The terms of cl 23(l) of the Will, which provides the trustees with discretion to maintain, repair and undertake other works at the Ramsgate property, also supports this interpretation. 17. In exercising their discretion about whether to undertake works and pay for them from the cl 8 fund, the trustees and executors will need to take account of all relevant circumstances and the interests of all the beneficiaries, acting dispassionately and not in the interests of one group to the detriment of another: Brooks v Young (2018) 361 ALR 329; [2018] SASCFC 81 at [92]. In this case, those circumstances would likely include ensuring the Ramsgate property was safe for the purposes of continuing occupation by the first defendant. The trustees would also need to consider whether it would be appropriate to incur the costs of doing replacement works or significant improvements if it is expected that any sale of the Ramsgate property would be based on land value with the residence and any outbuildings being demolished. 18. The terms of cl 8 also contemplate that the fund may not be extinguished and the remainder shall form part of the residue of the estate. This suggests there is no mandate on the trustees to use the cl 8 fund for repairs. 19. In summary, I have concluded that the cl 8 fund, and any interest which accrues on it, are not funds which must be used to pay for expenses which the first defendant is obliged to fund, or for repairs which fall outside her obligations under cl 7(b). The trustees are at liberty to decline to undertake repairs, including if they consider it financially imprudent to do so. 20. I have also concluded that, in the exercise of their discretion, the trustees and executors may choose to use the cl 8 fund to pay for expenses if the first defendant fails to comply with her obligations under cl 7(b) of the Will. In those circumstances, the trustees and executors may seek to recover the costs of doing so from the first defendant. Alternatively, those costs could be charged against or deducted from the share of residue to which the first defendant or her estate would otherwise be entitled under cl 10(a) of the Will. Conclusion and orders 1. It follows from these reasons that the plaintiff has had some success as has the first defendant, and that some of the positions proposed in the summons do not accurately reflect my conclusions. 2. Accordingly, I will stand the matter over to allow the parties some time to consider these reasons and not make any orders at this time. 3. I invite the parties to bring in short minutes of order to give effect to these reasons and to reflect any agreement between the parties in relation to costs within 14 days. 4. If the parties cannot reach agreement on the form of orders or wish to make further submissions on the issue of the consequence of any breach of the first defendant's personal equitable obligations or on costs, the parties are to confer and, within 14 days, propose directions for the exchange of submissions and the re-listing of the matter for a short hearing, assuming any remaining issues cannot be dealt with on the papers. ********** 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: 21 August 2019