A
bequest of a retirement village unit was read by the Court of Appeal as meaning
a right to receive cash payable on the termination of an occupation right. In a battle between beneficiaries, a total of
$291,000 was at stake.
Annie Dillon was a
prolific will-maker. In the decade prior
to her death in 2014 she signed twelve different wills. The final will, operative on her death, left
her ‘house unit at Birchleigh’ to Mr Robert Rutter. She told her lawyer Mr Rutter had become a
close friend. ‘Birchleigh’ referred to
her retirement unit at Chatsford retirement village in Mosgiel. As is common with most retirement villages,
Ms Dillon did not own her unit; she had a right of occupation with her estate
entitled to get back part of the purchase price on death.
Ms Dillon’s will named nieces
and nephews as residuary beneficiaries.
They share equally in what is left after payment of specific bequests. Nieces and nephews said there was no bequest for
Mr Rutter; he was to get a retirement unit and Ms Dillon did not own one. The lawyer drafting the will went to court
for a ruling on who was entitled to the $291,135 cash termination value of Ms
Dillon’s occupation rights: Mr Rutter or the residuary beneficiaries.
The Court of Appeal
applied a section in the Wills Act known colloquially as ‘the armchair rule’. Wills are to be interpreted by looking at
their terms with the benefit of background circumstances as if sitting in the
will-maker’s armchair. The Court ruled
Ms Dillon’s intention was to give Mr Rutter, not the unit itself, but termination
benefits relating to the unit.
Wilson
v. Davidson – Court of Appeal (18.10.17)
17.138