The Supreme Court of Queensland recently delivered judgment in Whitla v Launchbury & Anor on 24 April 2014. The case is of interest as it demonstrates the importance of the use of technical words in a Will and how the Court’s interpretation may alter the intended outcome desired by the Willmaker.
The deceased’s Will dated 9 April 2008 appointed his son and daughter as executors. The deceased gave any real estate that he owned at the date of his death to his daughter, his superannuation fund to his son, made other specific bequests and then gave the balance of his estate to be divided equally between his daughter and son in equal shares.
When the deceased made his Will, he lived in a property. However, after making his Will the deceased sold that property and moved into a unit at the Renaissance Retirement Village, Victoria Point. The underlying ownership of the unit remained with Renaissance VP Pty Ltd. The deceased’s interest was held via a sublease from the retirement village. Shortly before the deceased’s death, the deceased gave notice terminating the sublease, and moved into a nursing home. When the deceased died he was still registered as the owner of the sublease of the unit but no longer owned any freehold or leasehold property. As part of the sublease, the deceased lived rent free in the unit, but had lent the sum of $425,000.00 interest free to Renaissance VP Pty Ltd, as part of his in-going contribution.
The administrator of the deceased’s estate applied to the Supreme Court for a declaration or directions for the proper construction of the Will. The question for determination by the Court was whether the amount that was refundable pursuant to the proceeds of the loan from the deceased to Renaissance VP Pty Ltd was a gift to his daughter within the meaning of “real estate” or whether the proceeds of the loan was to form part of the balance of the deceased’s estate (to be shared between the deceased’s son and daughter in equal shares).
The Court held that the refund monies paid by the retirement scheme operator were not proceeds of real estate owned by the deceased at the date of his death, rather they were a refund of monies payable under a loan contract collateral to a sublease which he had previously terminated. The refund was included in the balance of the estate and divided between the brother and sister in equal shares.
This case is an example of the difficulties that may be encountered when Wills which leave specific property, where the nature of the property may change after the Will has been signed.
It is always important to consider the terms of your Will when, such as in this case, the nature of assets that you own change. The nature of the deceased’s asset of real estate changed approximately one year after the deceased’s Will was prepared. Whilst it may have been the deceased’s intention that the proceeds of sale or refund under a retirement village scheme would pass to his daughter, the effect of the Will has resulted in those funds being paid equally between his children in accordance with the deceased’s residuary estate.