The word ademption derives from the Latin noun ademptio, meaning a taking away. The concept of ademptio was known in the Roman law of succession. An intention to adeem is presumed in equity if the testator gives an inter vivos gift to the beneficiary in substitution for the gift in the will where:
- (1)a person in a parental relationship to a child gives a legacy to the child and subsequently makes an inter vivos gift of substantially the same quality as the legacy to the same child; or
- (2) where a person gives a legacy for a particular purpose and subsequently makes an inter vivos gift to the legatee for the same purpose.
In these cases, it is presumed that the donor did not intend that both benefits should be taken, with the inter vivos gift to either wholly or partially satisfy the legacy depending on the size of the gift. The presumption may be rebutted by evidence showing that the testator intended both the gift and legacy to have effect; similarly, evidence may be submitted confirming the presumption.
Where the rule against double portions applies it is rationalised by characterisation of its operation, not as an implied revocation of a will, but as an acceleration of the enjoyment of the provisions of the will: In re Cameron, deceased [1999] Ch D 386 at 417 and 421 D; Lake v Quinton [1973] 1 NSWLR 111 at 122B and 122E
However, where there is a discernible intention in the will that both gifts are to be effective, or only one gift is to be given to satisfy the obligation, the court will give effect to that intention.
Background
Bruce and Jeanette Pryor died, in July 2017 leaving substantial assets and no children. In June 2017 they had each executed mirror wills (the Wills) which divided the residue of their estates ( “the Estate”) among the following:
- (a) 50 per cent to the Australian National University (ANU) for medical research;
- (b) 25 per cent to Sydney University Hockey Club at the University of Sydney (through Sydney University Sport) (Hockey Club); and
- (c) 25 per cent to the respondent, Wesley College Sydney University (Wesley College),
On 17 July 2017, a company called Brujen Pty Ltd (Brujen) controlled by Bruce and Jeanette donated $2 million by cheque to Wesley College (17 July donation), which was received and presented on 19 July 2020. Bruce and Jeanette were the sole directors and ultimate shareholders, of Brujen.
The matter
The executor of the Estate, (The Plaintiff) sought a declaration that the 17 July donation which was made after the execution of the Wills but before Bruce and Jeanette died, constituted a partial ademption of the testamentary gift to Wesley College (The Respondent). Because of the mirror will provisions, the application was brought only in Bruce’s estate.
Two conditions must be satisfied before the presumption of an equitable ademption:
- first, the gift is given by the same person who leaves the legacy, and
- second, the gift is for the same purpose as given in the will.
The decision
Although the Court believed the first of those conditions is self-evident it was described as a condition because of the respondents submission that the identity of the testator (Bruce and Jeanette) and the donor of the gift (Brujen) were not the same.
The Court would have accepted the plaintiff’s submission that for the purposes of deciding whether the equitable doctrine was capable of applying, Brujen was an extension of Bruce and Jeanette. The gift came out of Brujen’s bank account and it was Brujen’s assets that were to form the majority of the residue when the company was wound up under the will. However, the Court held that a detailed resolution of the point was unnecessary, as the finding concerning the second condition is dispositive of the application.
The second condition required the Court to work out the intention of the donor. Importantly the purposes of the legacy and the subsequent gift need not be expressed in identical terms however the purpose of the gift must be sufficiently similar to support the inference that the donor intended the gift to be made in anticipation and fulfilment (partial or otherwise) of the legacy. This is referred to by the Court as “substantial identity”.
Further, the terms of the will need not expressly state the purpose or moral obligation to be fulfilled. It is sufficient if such purpose or obligation appears from the terms of the will; it is sufficient if the purpose or obligation can be worked out by implication or inference
The Will
The purpose of the gift of 25 per cent of the residue of the will was to be applied:
…toward the following under the direction of an independent firm of Architects experienced with the design and cost control of such projects:
maintenance, improvement, renovation, refitting, refurnishing and enhancement of the College’s existing buildings and facilities including their interiors.
The inter vivos gift
The sum of $2 million in the 17 July donation was to be applied:
…for the upgrade of the New Wing, under the terms of our letter to the Chairman, we have asked that this now be referred to as the Lisa Sutherland Wing.
We would also wish part of the Donation be put towards the repairs/replacement of the College roofs and other building maintenance work.
The Court held that there were obvious similarities between these two purposes:
- (a) The project of renovating the New Wing, an existing building falls within the purpose expressed in the Will of maintenance and improvement of the existing buildings.
- (b) The additional $1,000,000 for the restoration and maintenance of the College roofs also falls within that purpose.
The parties drew the Court’s attention to various authorities as being analogous or distinguishable from the above facts. The Court accepted that there is a way that the two purposes could be applied in a way that they directly overlap.
Given the timing of the Will and the 17 July donation, Bruce and Jeanette may well have envisaged that the Legacy would be spent on the New Wing and the roofs. However, there is also a way that the cheque for $2 million and the residual share under the Legacy could each be spent so there was no overlap at all.
However, in dismissing the claim the Court found that the purpose of the gift and the legacy were not the same. There was no intention from the surrounding circumstances that the gift was to be in substitution for the legacy specified in the will. Therefore the presumption of ademption does not arise.
The Court ordered costs of the proceedings to be paid out of the Estate.