Will Construction: When a gift to Joint Tenants may be construed as a gift to Tenants in Common

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Gunn v Stenders [2017] QSC 179

A joint tenancy is a form of ownership where two or more parties own the whole of the property together at the same time, and maintain an equal and undivided right to keep or dispose of the property. If two people buy a property as joint tenants and one person dies, ownership of the whole property passes (without transfer) to the other party by survivorship. A tenancy in common is different. If two people buy a property as tenants in common they hold divisible shares of the property. If a tenant in common dies, their share of the property forms part of his or her estate. The case of Gunn v Stenders [2017] QSC 179 provides guidance as to when the Court may construe a gift to beneficiaries as “joint tenants” (in a Will) as a gift to beneficiaries as tenants in common.

Mr and Mrs Stenders were separated, but still married, when Mr Stenders died in May 1995. In his Will, Mr Stenders gave his residuary estate to Mrs Stenders and their son as “joint tenants”. He directed that the gift to his son was to be held on trust until the son turned 25 years of age. However, Mrs Stenders died intestate (without a Will) in March 2014 before Mr Stenders’ estate was completely administered.

Mrs Stenders had 3 children from a previous marriage, namely Ms Gunn, Katrina and Leena. When Mrs Stenders died, Ms Gunn stepped into the role of administering Mr Stenders’ estate. As the applicant, Ms Gunn asked the Court to determine (amongst other things) whether Mr Stenders’ gift to his son and Mrs Stenders under his Will was a gift to them or as joint tenants or as tenants in common. The Court construed the gift as a gift to the beneficiaries as tenants in common.

 

Facts of the case

Mr Stenders’ Will clearly provided for his residuary estate to be given to Mrs Stenders and their son (Paulis) as joint tenants. However, Paulis’ share was to be held in trust by Mrs Stenders as trustee until Paulis turned 25.[1]

Mr Stenders’ pool of assets included real property, personal effects, a small sum of money and a motor vehicle. The real property consisted of an uninhabitable house on two lots, referred to in the case as Lot 2[2] and Lot 81. [3]

As the executor of the Will, Mrs Stenders arranged for a separate title to be issued for each lot.[4] Mrs Stenders also told her brother that she was “happy to take the smaller of the two lots (which was Lot 2) and would keep Lot 81 for [Paulis]”.[5]

In respect of Lot 2:

  • Mrs Stenders borrowed $70,000 in order to construct a new house.[6]
  • Mrs Stenders took out a mortgage for the loan (secured over both lots).[7] This mortgage was repaid from Mrs Stenders’ personal funds.[8]
  • Mrs Stenders lived there until she died intestate.

In respect of Lot 81:

  • This was purchased by Leena from her mother in May 2002.
  • Prior to selling the land to Leena for $50,000, Mrs Stenders sought and obtained Paulis’ approval. Documents showed that Paulis received $49,500 from Mr Stenders’ estate, when he was 21 years old.[9]

The Applicant sought the assistance of the Court to determine how the estate property was to pass to the beneficiaries, and what effect Mrs Stenders’ actions had on their beneficial ownership, for the purpose of enabling the Applicant to finalise the administration of the estate.

 

The Court’s decision:

The Honourable Justice Mullins considered the principle in Corin v Patton (1990) CLR 540 where there was a finding that joint tenancy required unity of title, unity of time, unity of possession and unity of interest.[10] Her Honour considered the direction of the Will that Mrs Stenders was to hold Paulis’ interest in trust (and thus separate from her own) as evidence of the fact that there was no complete unity in ownership.[11]

Her Honour also considered clause 5 of the Will giving the Executor the power of advancement of capital or income (contemplating L’Estrange v L’Estrange [1902] 1 IR 467), and found that the clause indicated “against the holding of the real property under a joint tenancy”.[12]

Considering Mr Stenders’ intention that Paulis not use or possess his share of the estate until Paulis turned 25 (but for the power of advancement), her Honour found the deceased’s wishes could only be achieved by construing the gift in the Will as a gift to tenants in common.[13] This was the finding of the Court.[14]

Her Honour also made the following findings or observations:

  • Mrs Stenders’ act of obtaining 2 separate titles for each of the Lots as suggestive that she had assented to “the vesting in equity of Lot 2 in herself for her share of the residuary estate under [Mr Stenders’] Will”;[15]
  • the payment of $49,500 by Mrs Stenders to her son Paulis was a complete distribution of Paulis’ entitlement under Mr Stenders’ Will;[16] and
  • per the rule in Saunders v Vautier (1841) 49 ER 282, Paulis “was entitled to claim his benefit when he reached the age of majority of 18 years”.[17]

 

Concluding Remarks

This case demonstrates that the proper construction of a Will may be different to the specific wording in a Will. Here, the Court determined that the gift should be construed as a gift to tenants in common, as it found the Will-maker’s intention differed from what was expressly stated.

This reinforces the importance of sound drafting to clearly reflect the testamentary wishes of the Will-maker. Seeking legal advice to properly draft a Will can save beneficiaries significant time, money and stress.

For more information regarding Will Construction

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our specialist Estate Lawyers today.

This article was written by Kathleen Watt, Associate & Ryan Tan, Lawyer.

 

[1] Gunn v Stenders [2017] QSC 179 at [4].

[2] Ibid, at [5].

[3] Ibid.

[4] Ibid, at [8].

[5] Ibid, at [7].

[6] Ibid, at [8].

[7] Ibid.

[8] Ibid.

[9] Ibid, at [9].

[10] Corin v Patton (1990) 169 CLR 540, 548, 572.

[11] Gunn v Stenders [2017] QSC 179 at [20].

[12] Ibid, at [21].

[13] Ibid, at [24].

[14] Ibid, at [25].

[15] Ibid, at [28].

[16] Ibid, at [29].

[17] Ibid, at [28].