Baird v Smee [1999] NSWSC 759 (3 August 1999)

Last Updated: 5 August 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Baird v Smee [1999] NSWSC 759

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 2954/98

HEARING DATE{S): 12/07/99

JUDGMENT DATE: 03/08/1999

PARTIES:

Lorraine Noeline Baird & Anor v Dolores Smee

JUDGMENT OF: Master Macready

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr C.J. Bevan for the plaintiffs

Mr P. Blackburn-Hart for the defendant

SOLICITORS:

Turner Freeman for the plaintiffs

Warren McKeon Dickson for the defendant

CATCHWORDS:

Wills. Mutual wills. Whether there existed sufficient facts to imply a condition that the wills would not be revoked without notice. Held in the circumstances that the condition should not be implied.

ACTS CITED:

DECISION:

Para 26

JUDGMENT:

- -

IN THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

MASTER MACREADY

Tuesday 3 August 1999

2954/98 LORRAINE NOELINE BAIRD & ANOR v DOLORES SMEE

JUDGMENT

1 MASTER: This is the hearing of these proceedings which concerns a claim as to the making of what are said to be mutual wills by Derek James McDonnell and Gwendoline McDonnell. The matter originally came before me for the purposes of hearing the defendant's Notice of Motion filed on 8 June 1999 seeking dismissal of a Statement of Claim both under Part 15 Rule 26 and Part 13 Rule 5. With the concurrence of the parties that motion was stood over to the final hearing of the suit which was brought on expeditiously. A judge of the court has referred the whole of the proceedings to a Master for his determination.

2 Derek James McDonnell and Gwendoline McDonnell married on 13 May 1967. Each had been married before and each had two children from an earlier marriage at the time of their marriage to each other. They each made wills on 12 November 1986. Their wills were not expressed to be mutual wills. They appointed the Public Trustee as Executor. The depositive part of the will of Derek James McDonnell is in clause 5 and is the following terms:-

"I give and devise and bequeath the whole of my estate both real and personal to my trustee upon trust to pay thereout all my just debts funeral and testamentary expenses probate estate death or other duties and thereafter for my wife Gwendoline McDonnell absolutely if she be living at the expiration of a period of thirty (30) days from the date of my death or should my said wife predecease me or survive me and die before the expiration of a such period of thirty (30) days then to divide the residue thereof into two (2) equal parts and to hold such parts upon the following terms and conditions namely:-

(A) As to one (1) of such parts for such of them my children James Robert McDonnell and Lorraine Noelene Baird who shall be living at my death and if both in equal parts absolutely provided however should my said children or either of them predecease me leaving a child or children living at my death who shall attain or have attained the age of eighteen (18) years such child or children shall take and if more than one in equal shares absolutely the share or interest his her or their parent would have taken under this clause of this my will had such parent been living at my death.

(B) As to the remaining one (1) of such parts for such of them my said wife's children Dolores Smee and Donald William Straney who shall be living at my death and if both in equal shares absolutely provided however should my said wife's children or either of them predecease me leaving a child or children living at my death who shall attain or have attained the age of eighteen (18) years such child or children shall take and if more than one in equal shares absolutely the share or interest his her or their parent would have taken under this clause of this my will had such parent been living at my death.

Provided however that should any of the above mentioned parts fail to vest then the total number of parts into which residue shall be divided shall be reduced by the number of parts failing to vest and the parts failing to vest shall be construed as nil parts."

3 Gwendoline McDonnell's will was a mirror image of this will. Derek McDonnell died on 27 April 1992 and the whole of his estate under his will passed to Gwendoline. On 12 March 1993 Gwendoline made a new will under which she left the whole of her estate to her two children to the exclusion of Derek's children. Gwendoline died on 23 April 1996 and probate was granted in respect of her 1993 will.

4 The house held by Derek and Gwendoline was held by them as joint tenants and passed by survivorship to Gwendoline and now hence to her children. The estate of Donald comprised a small amount of cash in the order of $20,000.

5 In an Amended Statement of Claim the plaintiffs have pleaded the terms of the agreement for mutual wills as relevantly being the following:-

'(i) that each testator would gift his or her estate absolutely to the other testator and that in the default of the other testator surviving the original testator would gift his or her estate equally to his or her own children of the one part and to the children of the other testator of the other part in equal shares.

(ii) that each testator promised that he or she would not revoke his or her mutual will without giving reasonable notice to the other.

(iii) that in the event that the first of the two testators to die died in reliance on his or her mutual will that the survivor of them would not revoke his or her mutual will prior to his or her death."

6 This case is notable for the fact that there is no direct evidence of the alleged agreement to make mutual wills in the terms set out above. The court has been asked to infer that there was such agreement from the following conduct which is particularised in paragraph 2B of the Amended Statement of Claim. That paragraph particularises the following circumstances as giving rise to the agreement.

"(i) The implication arises from the terms of each of the mutual wills and in particular the division into two equal parts of the residuary gift of the property of each testator and the gifting of those equal parts to the children of the first marriage of each testator.

(ii) The implication arises from the fact of the making of mutual wills in identical terms as regards gifting of property equally to the children of each testator and the children of each testator's spouse in the circumstances of the marriage between each of the testators being the second marriage of each testator .

(iii) The implication arises from the delay on the part of the deceased as the survivor of the two parties to the mutual wills agreement in revoking her mutual will for a period of more than six years between 12 March 1986 and 27 April 1992 (when Mr McDonnell died) but instead revoking her mutual will some 10 months after Mr McDonnell's death in circumstances where there is no explanation for that delay, other than that the deceased was aware that Mr McDonnell died in reliance on the terms of the mutual wills agreement and the mutual wills made pursuant to it.

(iv) The implication arises from the state of mind of Mr McDonnell as to his understanding of the existence of the mutual wills agreement as is apparent from the terms of the conversations attributed to him in paragraph 4 of the affidavit of James Robert McDonnell sworn 25 June 1998 and in paragraphs 3 and 4 of the affidavit of Lillian Jean McDonnelll sworn 24 June 1998."

7 In order to see whether the court can come to the conclusion which is suggested by the plaintiffs it is necessary to look at the evidence which was adduced on the point. As I have already mentioned above both of the deceased had previously married and had children by their earlier marriage. It was on 12 March 1986 after they had been married for some 19 years that they made their wills. The wills themselves did not contain any recital of an agreement for mutual wills nor were they even expressed to be mutual wills. There was also tendered in evidence the will instruction sheet from the Public Trustee who was engaged to draw the wills. That also makes no reference to the wills being mutual but merely reflects what was produced by way of wills and signed by both deceased. Derek McDonnell's former wife, Lillian Jean McDonnell gave evidence. She and Derek were divorced in May 1963 and notwithstanding this she and Derek maintained a cordial relationship given their children's interests. She recounted two occasions when Derek spoke to her about the wills. In 1987 during a conversation at South Sydney Junior Leagues Club Derek discussed the arrangement he had made with his then wife, Gwendoline. He said:-

"Gwen and I have made our Wills and they provide for our assets to be left to our two children and to Gwen's two children so they will all be provided for."

8 This conversation was about a year or so after the wills had been made. At a later time, which she estimated at about five weeks prior to Derek's death Lillian McDonnell said that Derek rang her and said:-

"I am not well and I really only have a short time left. The children need not worry about the property. What I told you before about Gwen's and my Wills has not changed. Each of the children will be looked after."

9 The only other evidence which was available to the court was that given by the son of Derek, namely, James Robert McDonnell. Several months before his father's death he came across his father who mentioned to him that he had cancer and that he wanted to talk to him. They met at the Lakes Hotel the following Saturday where the deceased, Derek, said to his son:-

"Gwen and I have made our wills. They provide that my half of the unit will go to you and your sister and the other half to Gwen's children."

10 As I have mentioned Derek died on 27 April 1992 and it was on 12 March the following year that Gwendoline made her new will.

11 In Birmingham v Renfrew (1936) 57 CLR 666 the High Court set out a number of principles which apply in respect of mutual wills. At page 674 His Honour Chief Justice Latham had the following to say:-

"There was evidence which, if believed, justified the learned judge in finding that the existence of the agreement in the terms already stated was established. Those who undertake to establish such an agreement assume a heavy burden of proof. It is easy to allege such an agreement after the parties to it have both died, and any court should be very careful in accepting the evidence of interested parties upon such a question. Perhaps most husbands and wives make wills "by agreement," but they do not bind themselves not to revoke their wills. They do not intend to undertake or impose any kind of binding obligation. The mere fact that two persons make what may be called corresponding wills in the sense that the existence of each will is naturally explained by the existence of the other will is not sufficient to establish a binding agreement not to revoke wills so made (In re Oldham 60 (1925) Ch. 75; Gray v. Perpetual Trustee Co. 61 (1928) A.C. 391; and see Lord Walpole v. Lord Orford 62 [1797] EngR 489; (1797) 3 Ves. 402; 30 E.R. 1076, where attention is directed to many considerations which may go to show that in a particular case no binding agreement was intended)."

12 At page 681 His Honour Dixon J agreed that the agreement can only be established by clear and satisfactory evidence. He went on to expand on the result of the agreement found by the trial judge in these terms:-

"Gavan Duffy J. found that an agreement had been made, and I do not think that his finding can be set aside. He found, too, that the arrangement was not of a character leaving legal relations unaffected. So far as this is a question of fact, I think he was fully justified in taking the view that the wife meant to obtain from her husband a promise and meant that it should be communicated to the intended beneficiaries in order the better to ensure its fulfilment. I think the legal result was a contract between husband and wife. The contract bound him, I think, during her lifetime not to revoke his will without notice to her. If she died without altering her will, then he was bound after her death not to revoke his will at all. She on her part afforded the consideration for his promise by making her will. His obligation not to revoke his will during her life without notice to her is to be implied. For I think the express promise should be understood as meaning that if she died leaving her will unrevoked then he would not revoke his. But the agreement really assumes that neither party will alter his or her will without the knowledge of the other. It has long been established that a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the other takes property under its dispositions. It operates to impose upon the survivor an obligation regarded as specifically enforceable. It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will."

13 These passages refer to what has been described in later cases as the key element in the concept of mutual wills, namely, the agreement not to revoke. See Re Newey (decd) (1994) 2 NZLR 590 at 593, Re Goodchild [1997] EWCA Civ 1611; (1997) 1 WLR 1216 at 1225 and Hubbard v Mason Santow J unreported 9 December 1997. They illustrate the requirement that the parties must have intended to enter into legally binding relations. They also refer to the burden of proof which in New South Wales is the ordinary civil standard under s 140 of the Evidence Act. Having regard to the subject matter this would require clear and satisfactory evidence. See Hubbard v Mason at p 17.

14 It is clear that the agreement not to revoke may be implied from all the circumstances. See Hudson v Gray [1927] HCA 31; (1927) 39 CLR 473 at 487, Birmingham v Renfrew (1937) 57 CLR 666 at 683 above, Brigg v Queensland Trustees Ltd (1990) 2 Qd R 11 at 14, Low v Perpetual Trustees WA Ltd (1995) 14 WAR 35 at 42-3 and Aslan v Kopf NSW Court of Appeal 16 May 1995 unreported.

15 The judgment of the court in Aslan v Kopf was given by Gleeson CJ who when discussing the question involved in that case said the following:-

"A particular application of these general principles arises in the case of people who, in a contractual context, make mutual, or corresponding, wills. (People may, of course, make mutual wills in a context where there is nothing more to it than that, and they regard themselves as free to alter their wills as they please or as circumstances alter). The law on this subject was explained by Dixon J in Birmingham v Renfrew (1936) 57 CLR 666 . (See also Bigg v Queensland Trustees Ltd (1990) 2 Qd R 11).

If two persons make mutual wills, and agree, expressly or by implication, and either conditionally or unconditionally, not to revoke their wills, a breach of that agreement gives an entitlement to an equitable remedy. If the agreement is express, equity will give effect to it according to its tenor. If it is implied, it will be important to identify with precision the nature of the implied promise.

It may, in a particular case, and depending upon the circumstances, be proper to conclude that the parties to an agreement to make mutual wills by implication agreed, unconditionally, never to revoke their wills. Ordinarily, however, and especially when all that is relied upon for the implication is the conduct of the parties in making mutual wills, the proper implication is that neither party will revoke his or her will without notice to the others.

.......

It was clearly arguable that there was an implied agreement between Napti, Cox and the appellant that, so long as three of them remained alive, no one of them would revoke his will without giving notice to the other two. No such argument was advanced, no doubt for the reason that such an implication was of no assistance to the appellant. During the lifetime of the other two and, indeed, within a few weeks of the making of the mutual wills, Cox gave Napti and the appellant notice that he was revoking his will."

16 In the present case the submission of the plaintiffs fastened upon His Honour's comments that it was clearly arguable that there was an implied agreement not to revoke without notice. However, it is not apparent what was the precise evidence relied upon and, in any event, as notice of revocation was given the court was more concerned with the next level, namely, whether the agreement was never to revoke the will.

17 As has been mentioned above and, indeed, in may cases the mere fact that there are corresponding wills executed simultaneously is relevant to, but not determinative of, the question of whether the parties intended to enter into a legally binding agreement to execute mutual irrevocable wills. Such agreement does not necessarily have to be expressed in the language of revocation. If one looks at the conversations which I have set out above there are two things that are immediately apparent. The first is that none of the conversations refer to the fact that the property was to be left to the other person prior to it being left to the children. The second matter is that all the conversations address is the contents of the wills. There is no indication that the wills comprise a mutually binding arrangement between them which will not be changed. Therefore such an agreement which is necessary if the plaintiffs are to succeed must result from some implication from other facts. The only other facts which might assist the process of implication are the matters pleaded in paragraph 2B of the Amended Statement of Claim. I myself can see no reason why delay should be a reason for implying the necessary condition and the only arguable matter is that which appears in sub-paragraph (ii) of the Particulars to paragraph 2B of the will which I have quoted above.

18 If one looks at that circumstance that of itself would not necessarily lead to the appropriate implication. We are here dealing with two people who are married, living together and who have children from prior marriages. The ordinary experience of life would tend to suggest that there may be circumstances in which such children may offend a testator sufficiently to cause a change in testamentary intentions. The evidence also showed that the two deceased did not bring with them any substantial assets from their previous marriages. In the circumstances the relevant property was something which they had accumulated themselves during their marriage.

19 Mr McDonnell's state of mind as revealed in the conversations only goes to the content of the wills not the question of any relevant agreement. I am mindful that the later conversations were shortly before and in the knowledge of his certain death.

20 The facts of other cases are not always helpful but I note that the relevant evidence in Hubbard v Mason was described by Santow J in these terms:-

"While binding character of such an alleged contract depends upon implying a term not to revoke and finding consideration, each can be found. The words of the alleged conversation, were that "when Bill dies Bill will leave the unit to Ronald and Laura", with Bill saying "that's right". That clearly implies Bill's last will would so provide, thus precluding revocation. Then the earlier words "I have made a will leaving everything to Bill because Bill doesn't have anywhere else to live. If I don't leave everything to Bill then everything would have to be sold", imports consideration, namely that Mr Hubbard would not revoke his will in favour of Bill Mason."

21 The important element of the evidence is the linking of the operation of the will to Bill's death. By way of contrast in Hudson v Gray (supra) the relevant evidence was described in these terms:-

"Mrs Hargrave expressed the wish that the children should only be given life interests in the property so that the Perpetual Trustee Co Ltd should have the management of the property during their lives and that then their children could be provided for. After considerable discussion of this question, Mr Hargrave agreed to Mrs Hargrave's view, and so far as I can remember something was said between them to the effect that if he made a will leaving everything to her for life with remainder to the children for life and then to their children would she do the same, and she said that she would."

22 Higgins J who was one of the majority carefully considered this evidence and decided at p498 that even if it was accepted it did not amount to an agreement to revoke. Starke J, like Isaacs J, decided the matter on the basis that the promise did not affect the settled property. However, Isaacs J considered that the conversation and the circumstances of the execution allowed the implication of the agreement not to revoke.

23 In Low v Perpetual Trustees WA Ltd (supra) the fact that the parties were planning their affairs for when they "died" seemed to be an important element in implying the necessary condition.

24 In assessing the evidence of the conversation it should be borne in mind that there is no report of any statement by Mrs McDonnell. It appears from the somewhat varied results illustrated in the cases that it may be easier to imply the necessary condition if the corresponding wills were made on the deathbed of one of the testators. The opportunity for circumstances to arise which might lead to revocation would be non-existent and the clear contemplation of the parties would be the imminent death. A similar result would occur if the discussions were predicated upon what would happen on a party's death.

25 In this case the wills were made six years before Mr McDonnell's death. One can assume that there was discussion between Mr and Mrs McDonnell at the time of making the wills about the terms of the wills. Unfortunately, there is nothing in the two reported conversations shortly prior to death which suggests that Mr and Mrs McDonnell had again discussed the matter. Indeed, the second conversation recounted by Lillian Jean McDonnell in terms only confirms the advice previously given. For all the court knows Mr McDonnell may have been relying on the fact of the initial discussions and may not have again discussed the matter with Mrs McDonnell. There is thus no evidence that both Mr and Mrs McDonnell considered the matter after the initial discussions which would have occurred at the time of making the wills. In these circumstances one has to remove the imminence of death as one of the relevant facts to be considered when deciding whether or not to imply the condition.

26 In my view the evidence in this case does not establish the appropriate agreement that the wills would be mutually binding and would not be revoked without notice. In these circumstances I dismiss the proceedings and order the plaintiff to pay the defendant's costs.

**********

LAST UPDATED: 04/08/1999