Wills Keep Producing Suprising Results for Left Behind Family Members

The Chief Justice of the Supreme Court of Queensland (and soon to be Governor) on 24 April 2014  delivered a judgment in the matter of Whitla (as administrator of the estate of Allan James Launchbury)(the Applicant) v. Barbara Jane Launchbury (the First Respondent) and Jonathon David Launchbury (the Second Respondent).

The applicant was a lawyer appointed to act as administrator of the estate. Barbara and Jonathon were both children of the deceased. They had been appointed in their father’s Will as executors but as a dispute had arisen between them as to the interpretation of the Will, they had to step aside and a solicitor was appointed to act as administrator in their place.

The father in his Will made in 2008, left Barbara “any real estate that I own at the date of my death”, his superannuation fund to Jonathon and some other minor gifts. The residue of his estate was left to Barbara and Jonathon in equal shares.

At that stage the father lived in his own property at Lammermoor. The Will seemed simple enough. However, in June 2009 the father sold his residential property and moved into a retirement village. To move into the retirement village, the father entered into a rent free sub-lease of a unit at the village which he could terminate on one month’s notice.

The father gave notice terminating the sub-lease on 27 March 2012 and after the notice period vacated his unit and moved into a nursing home.
When he died in July 2012, the father was still the registered owner of the sub-lease of the unit. He owned no other freehold or leasehold property. Associated with the rent free sublease was a loan agreement under which the father lent $425,000.00 interest free to the operator of the retirement village. This was referred to as his “resident’s ongoing contribution”.

On the termination of the sublease the parties were obliged to co-operate to re-let the unit. It was not re-let until 17 May 2013 which was after the father died in July 2012.
After deducting about $70,000.00 in fees they were entitled to, the retirement village owed the father’s estate approximately $355,000.00. The issue became, who was entitled to that $355,000.00.

Barbara said she was because it was the proceeds of “any real estate” that her father owned at the date of his death.
Jonathon and the administrator both believed that the $355,000.00 to be paid to the estate were not proceeds resulting from the ownership of real estate owned at the date of the father’s death. They argued that the proceeds were in fact the amount to be repaid to the father (and hence his estate) pursuant to the loan agreement.
Without knowing specifically what the father intended when he drafted his Will, it is possible he considered the $355,000.00 in this situation would go to Barbara.
If he did have that intention, then that intention has been defeated by the drafting of his Will and his subsequent move into the retirement village with the financial arrangement associated with that village.

The Chief Justice found that the $355,000 was not proceeds as a result of ownership of real estate at the date of the father’s death. The proceeds were the proceeds of an amount owing pursuant to a loan agreement (notwithstanding that loan agreement itself was associated with a sub-lease which is an interest in real estate). As a result, the $355,000.00 sum formed part of the residue of the estate and is to be shared equally between Barbara and Jonathon. So Jonathon won!

As is also the case when disputes over estates end up in the Supreme Court, no doubt legal fees were substantial (there were three firms of solicitors involved, as well as three barristers retained by each of those firms at the hearing). So regardless of who succeeded between Barbara and Jonathon, the estate was no doubt diminished by a substantial sum for legal fees as well, which the father would not have been wanting to see occur.

I draw two things from this case. Firstly, the drafting of Wills is incredibly important and as lawyers we take great care in  doing that.

Secondly, and with an ageing population, more mums and dads will move into retirement villages and subsequently nursing homes in the future. The financial arrangements for entering homes are often not straight forward and as this case shows, need to be fully understood including as to how leaving one’s estate may be affected.
So what may have appeared to the father to be a simple method of dividing his estate between his children has very likely provided a vastly differently result to the one that he intended. Feel free to contact the solicitor of your choice at the firm for guidance in your own circumstances.