Who pays the rates?
The relatively short judgment of His Honour Justice Pembroke in Peters v Taylor [2017] NSWSC 965 serves as a reminder to people considering providing a conditional gift in their will to any beneficiaries, to be aware of the consequences if those conditions are not fulfilled.
In this matter, the deceased grandmother’s will granted a right of residence to her granddaughter to remain living in her house for a period of time subject to certain conditions. The relevant clause of the deceased’s will stated:
- AFTER PAYMENT of all my just debts death duty funeral and testamentary expenses I GIVE DEVISE AND BEQUEATH all my estate of whatsoever sort and wheresoever situate to my Trustee on trust as follows:
(a) TO permit my granddaughter [NAME] to reside in my home [ADDRESS] for a period of Ten (10) years from the date of my death provided that she pays all rates, levies and taxes levied on the said property and keeps the property insured against loss and damage from fire, storm and tempest to an amount and in an insurance company approved by my Executor and that she maintains it in a state similar to that in which it is at my death.
Difficulties arose when the Council and water rates were not kept up to date and paid by the granddaughter as required by the conditions in the will. Insurance for the property was maintained by the granddaughter, but she did not obtain the consent and approval from the executor for the policies she took out.
The failure of the granddaughter to comply with the conditions imposed upon her by the will caused the executor (the granddaughter’s brother) to apply to the Supreme Court for orders declaring that the granddaughter’s right to live in the home had lapsed.
Whilst the Court agreed with the executor that the granddaughter needed to comply with the conditions stated in the will, the Court did not find that the right to live in the property had lapsed. His Honour Justice Pembroke ordered that the granddaughter attend to paying the Council and water rates by the end of the month and in addition, that she must provide insurance policy details to the executor for his approval.
The executor’s costs of the proceedings were ordered to be paid by the residual estate and not specifically from the granddaughter’s share. The costs of the proceedings could have been avoided had the granddaughter ‘compl[ied] scrupulously with the conditions of the will in relation to the issue of Council rates, water rates and insurance’, but at least the will made it clear who was responsible for those expenses.
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