Ethel Greenham died in February 2017 aged 80 years of age with an estate valued at over $2M. Ethel’s Will dated 9 December 2003, named her daughter Jennifer executor leaving land at Pental Island on the Murray River (“the land”) to her son Alan, and the residue of her estate to Jennifer.
By clause 4(d) of the Will Ethel devised to Alan:
… my real estate at Pental Island being Allotment 7 in the Parish of Pental Island County of Tatchera and being the land comprised in Crown Grant Volume 9429 Folio 754.
Alan and his wife, Mary live in a house situated on the land and operate a caravan park and holiday business (the caravan park) together with farming activities. The land was purchased in 1939 by Alan and Jennifer’s grandfather and used as a farm; the caravan park is now the main commercial enterprise conducted on it.
The land does not have access to town water; with water for the farm and the caravan park provided by rainfall and the Murray River which abuts the land.
Until the Water Act 1989 was amended on July 1, 2007, water flowing in a watercourse in Victoria was not property capable of being owned and transferred separately to land. Common law rights to use water were derived from a person’s ownership or occupation of land abutting the watercourse.
From July 1, 2007, ownership of a water share could be transferred independently of a transfer of land and, on the death of the owner, forms part of their estate. Ethel owned three water shares issued in relation to the Murray River water system.
Ethel made her Will in 2003 several years before the commencement of the above amendments to the Water Act 1989.
Probate of the Will was granted to Jennifer in April 2019.
Jennifer commenced proceedings in the Supreme Court seeking a declaration as to the nature of the water shares; if those shares form part of the devise of ‘real estate’ under the will, they pass to Alan; if they are part of the residue of the estate, they pass to Jennifer.
According to the Inventory of Assets and Liabilities prepared as part of the application for probate the total value of the water shares was $754,850. However, in evidence before the Court their value was approximately $1,589,580.
The question for determination is whether, properly construed, the reference to ‘my real estate at Pental Island’ includes the water shares.
When does a Will take effect?
A key issue in determining the proper construction of the Will was whether, concerning property disposed of by the Will, s34 of the Wills Act 1997, provides that unless a contrary intention appears (whether in the will or elsewhere) the Will takes effect as if it had been executed immediately before the death of the testator.
A Court uses the armchair principle to ascertain the testamentary intention of the Will maker. Such intention must be disclosed through the ordinary meaning of the words used; however, the intention is to be gathered from a study of the Will as a whole, and in the light of any relevant and admissible evidence of surrounding circumstances.
In Victoria, s 36 of the Wills Act 1997, supplements the armchair principle providing that where a Will is made on or after 20 July 1998, evidence of the testator’s intention is admissible in cases of uncertainty or ambiguity, to assist in the interpretation of the language of the will, both where the uncertainty or ambiguity arises on the face of the Will or in light of surrounding circumstances.
The Court held that the Will manifests an intention that it should be construed as at the time that the will was made – therefore the reference to ‘my real estate at Pental Island’ in the Will includes the deceased’s water shares.