Microsoft Word - Judgment 2010 No 297 Hamza -v- Subair April 6 2011.docx

[2011] SC (Bda) 18 Civ (8 April 2011)

In The Supreme Court of Bermuda

CIVIL JURISDICTION

2010: No. 297

BETWEEN:

AMANDA HAMZA

Plaintiff

-v-

(1) DR. HENRY SUBAIR

(2) DR CLARENCE JAMES

(As Trustees of the Estate of Mohamed

Suleiman Hamza)

and

(3) ALIA HAMZA

Defendants

JUDGMENT

(In Court)

Date of Hearing: March 30, 2011

Date of Judgment: April 8, 2011

Mr. Mark Diel, Marshall Diel & Myers, for the Plaintiff

Mr. David Kessaram, Cox Hallett Wilkinson, for the Trustees

Mr. Delroy Duncan and Mr. Kyle Masters, Trott & Duncan,

for the 3rd Defendant

2

Introductory

1. The Plaintiff (who is not Bermudian) is the widow of and the 3

rd

Defendant (who is

Bermudian) is the daughter of the Testator, by a previous marriage. The Testator was a

doctor who practised as a consultant in Bermuda prior to his death on May 22, 2001. The

Trustees are former colleagues and friends.

2. By an Originating Summons issued on September 3, 2010, the Plaintiff seeks the

following relief:

“Pursuant to clause 2(c) of the Last Will and Testament of Mohamed Suleiman

Hamza dated 30 April 2001 an order that:-

(a) the Defendants as Trustees of the Estate of Mohamed Suleiman Hamza,

deceased, sell the property known as on ‘On the Rocks’, situated at 34 West

Side Road, Sandys Parish; and

(b) that the proceeds of the sale of the property be used to purchase a

reasonable property in Scotland for the Plaintiff’s use for her life.”

3. It was recently ascertained that the Plaintiff requires a permit under Part VI of the

Bermuda Immigration and Protection Act 1956 (as amended with effect from June 22,

2007) to continue to hold her interest in the property to which this action relates (“the

Property”). As a result, in or about January, 2011 the Plaintiff apparently applied for a

permit under the 1956 Act in relation to her interest in the Property. Because the result of

this application potentially impacts on the relief sought, it was common ground that the

application for the primary relief sought would have to be adjourned.

4. However, the Plaintiff’s counsel was eager to have what was in effect a preliminary point

of construction resolved. At the beginning of the hearing I declined to adjourn the

Plaintiff’s application altogether, as sought by a Summons issued by the 3

rd

Defendant.

This Summons sought to have the Court determine as a preliminary issue whether or not

the Trustees could lawfully hold the Plaintiff’s interest under the Will so long as she did

not have a permit. On balance, it appeared to me to be more cost-effective to determine

the construction of Will point first as it was clearly the shorter point and would definitely

have to be resolved if the requisite permit was obtained. As Mr. Diel submitted, there was

no basis for the Court at this juncture assuming that the permit application would be

refused. On the other hand, I accepted that subsequent events might prove this judgment

to be wrong, so I reserved the costs of the 3

rd

Defendant’s application after refusing it.

5. The construction of the Will point, which in the event was fully argued in less than a day,

was raised in Dr. Subair’s October 21, 2010 Affidavit as follows:

“24. I and Dr. James are conscious that we have to adhere to the terms of the

Will which state that if Amanda so desires, we should sell the Property and

purchase another house, condominium or apartment for her. However, the Will

3

remains silent as to whether the replacement property should be in Bermuda or

can be purchased overseas.

25. At paragraph 4 of her affidavit Amanda refers to her affidavit sworn on 11

th

April 2007 in action 2007: No. 45 where she ‘required the property be sold and a

property bought for me in Scotland.’ She continues, ‘The Trustees have failed to

even begin carrying out this request.’

26. As noted above, I and Dr. James have only recently managed to regain

control of the Property by Consent Order dated 12

th

August 2010. Further, we are

unsure as to whether the terms of the Will allow us to carry out Amanda’s request

in full. Therefore, we would be grateful for the Court’s direction on this issue.”

6. It emerged at the hearing that two points of interpretation required to be decided: (1) did

the Will permit the Trustees to purchase real estate overseas for the Plaintiff’s lifetime

use; and (2) did the Will require the Trustees to follow the Plaintiff’s wishes in terms of

both selling the Property and choosing an alternative property.

The Will

7. Clause 2 of the Will dated April 30, 2001 devises all of the Testator’s real and personal

property to his Trustees upon trust:

“(c) To hold my house ‘On the Rocks’ situate at 34 West Side Road Sandys (‘the

House’) for the absolute benefit of my wife AMANDA until her death or

remarriage whichever shall first occur (without impeachment for waste) and after

her death or remarriage (as the case may be) the House shall form part of my

residuary estate to be dealt with in accordance with sub clause (j) hereunder.

During such time as the House is held for Amanda, she shall be responsible for

the usual outgoings necessary to maintain the House including insurance, land

tax, utilities, running repairs and general maintenance (such outgoings

hereinafter collectively referred to as ‘the general maintenance expenses’).

Amanda shall be allowed to live in the House or, if she so desires, it shall be

rented with the income therefrom being paid to her after deduction of a suitable

amount to enable my Trustees to meet the maintenance expenses of the House. If

Amanda so desires, my Trustees shall sell the House and purchase another house,

condominium or apartment for her as long as the sale proceeds from the House

are sufficient for such purpose (and if not, then any shortfall shall be made up by

her). If there is a surplus of funds from the sale of the house then such surplus of

funds shall be deposited in an interest bearing account (or otherwise soundly

invested) with income or interest accruing for the benefit of Amanda until her

death or remarriage. In any event the House or its proceeds of sale, or any

investments into which it may be transmuted shall (after the death or remarriage

4

of my said wife) be held by my Trustees on the trusts contained in sub clause (j)

below.”

8. The 3

rd

Defendant is a residuary beneficiary under clause (j) of the Will entitled to

receive the Property or the capital generated by its sale.

Construction of the Will: applicable principles

9. Mr. Diel referred the Court to Halsbury’s Laws, 4

th

edition Reissue, volume 50,

paragraphs 423-425 and 431-432. The dominant principle is that the Court must give

effect to the “testator’s intention, as declared by him and apparent in the face of the

will…so far and as nearly as may be consistent with law…The expressed intention is in

all cases taken as the actual intention, whatever the testator in fact intended, and as a

general rule the court may not give effect to any intention which is not expressed or

implied in the language of the will itself” (paragraphs 423-424).

10. Counsel also referred the Court to the following passage from Halsbury’s Laws which

elaborated upon the dominant rule of construction:

“In ascertaining the testator’s intention, the court of construction is concerned with

three distinct matters:

(1) the words which the testator has used to express his intentions;

(2) the meaning of those words in relation to the persons and things described, that

is to say, who and what are the specific persons and things to be identified as the

donees and the subjects of disposition, or as the persons and things otherwise

mentioned in the will, and

(3) the meaning of the words in relation to the disposition of property among the

donees.”

11. As regards the extent to which extrinsic evidence is admissible to construe a will, Mr.

Diel relied upon the following passage in paragraph 431 in the same text: “ In order that

the will may be properly expounded, the court adopts the general rule that any evidence

of the circumstances is admissible which in its nature and effect simply explains what the

testator has written, but in general, no evidence may be admitted which in its nature or

effect is applicable to the purpose of showing merely what he intended to have written.

Extrinsic evidence may be resorted to for the purpose of proving a fact which makes

intelligible something in the will which, without the aid of such evidence, would not be

intelligible. ”

12. Finally the Plaintiff’s counsel submitted that: “The court construes the whole will in the

light of the knowledge of the meaning of the words and expressions used and of the

identity of the persons and things described by the will, and of the nature of the facts and

circumstances there mentioned, which have been obtained by the admission of evidence

of the material circumstances” (Halsbury’s Laws, Vol. 50, paragraph 432). On the basis

5

of this latter principle, I was invited by Mr. Diel to take into fact as a material

circumstance the fact that the Plaintiff was not Bermudian and likely to want to live

outside Bermuda; Mr. Kessaram invited the Court to take into account the difficulties of

non-professional Trustees (identified as the Testator’s friends in the Will) administering

overseas property.

13. The rules of construction identified by Mr. Diel were not challenged by Mr. Kessaram,

nor by Mr. Duncan, who essentially adopted a neutral stance in relation to the

application. There do not appear to be any local statutory provisions or case law which

depart from the common law rules identified by Halsbury’s Laws. In Re Landy [2003]

Bda LR 26 where counsel referred to the same rules of construction as outlined in other

leading English texts, I concluded (at page 4) as follows:

“These guiding principles on the interpretation of wills have been affirmed by the

Bermudian Court of Appeal in Re Murphy, deceased (Hind-v-Murphy) [1992]

Bda LR 9, a decision which is binding on me. In that case, Harvey da Costa

(Acting President) at page 2 of his judgment, delivered on behalf of the Court,

cited with approval the following passage from Roddy-v-Fitzgerald (1857-58) VI

H.L.C. 875:

“ It is very often said that the intention of the testator is to be the guide,

but that expression is capable of being misunderstood, and may lead to

speculation as to what the testator may be supposed to have intended to

write, whereas the only and proper inquiry is, what is the meaning of that

which he has actually written…”

Under Bermuda law, the prohibition on utilizing evidence of events after the

death of a testator to determine the meaning of words in his will arises from

section 20 of the Wills Act 1988, which provides: “Every will shall be construed,

with reference to the real and personal estate referred to in it, to speak and take

effect as if it had been executed immediately before the death of the testator unless

a contrary intention appears by the will.”

14. I also note that the Will describes the estate representatives not as executors but

“Trustees”; this appears wholly consistent with the following provisions of the

Administration of Estates Act 1974:

“Trust for beneficiaries

23 Subject to this Act, the estate representatives of a deceased person shall hold

the real estate which devolves upon and becomes vested in them under section

22(1) as trustees for the persons beneficially entitled thereto in accordance with

the will of the deceased person or the law relating to intestacy, or the

combination of his will and that law, and those persons shall have the same

6

power of requiring a transfer of real estate as persons beneficially entitled to

personal estate have of requiring a transfer of such personal estate.”

Does “purchase another house” in clause 2 (c) the Will mean “purchase another house in

Bermuda (but not abroad)”?

15. Mr. Diel submitted that having regard to the fact that the Plaintiff is not Bermudian, and

was not Bermudian at the date of the Will, executed shortly before the Testator’s death, it

made no sense to infer that the Testator intended to tie his widow to living in Bermuda

property. He invited the Court to conclude that the unqualified reference to “another

house [etc.]” should be construed as including property both within and without

Bermuda.

16. Mr. Kessaram submitted that the limited scope of the Plaintiff’s interest in the Property

was originally designed to steer clear of the need for her to acquire a permit as a non-

Bermudian to hold an interest in Bermuda real estate. Her rights in the Property were

limited to residence or income if she chose not to reside in the Property. The 2007

amendments to the 1956 Act extended the permit requirements to cover interests such as

the Plaintiff’s. In construing the Will and determining whether or not the Plaintiff had the

right to request the purchase of another house overseas, the Will had to be looked at as a

whole. The only relevant residuary beneficiary was Bermudian. The Trustees were not

professional trustees and it would be onerous for them to manage property abroad. While

I have considerable sympathy for the difficulties faced by the present Trustees in relation

to the instant estate, I am bound to accept Mr. Diel’s argument that this latter point lacked

merit from legal interpretation point of view.

17. At first blush I would incline towards the view that, adopting a modern internationalist

approach to an international jurisdiction like Bermuda and a non-local widow like the

Plaintiff, the term “another house” should be construed liberally to include a house

abroad. However, there are four cumulatively compelling factors, taking into the

material circumstances surrounding the Will, which tip the scales in favour of the

contrary interpretation. The main circumstances I consider to be material are: (a) the fact

that the Will is a Bermuda instrument which appoints Bermudian Trustees and primarily

deals with Bermuda property; (b) the different Bermuda immigration status enjoyed by

the widow and the residuary beneficiary; (c) the relative youth of the widow at the

Testator’s death shortly after the Will was executed (she appeared to me in Court, nearly

10 years later, to be a woman at most now in her forties), and (d) the notorious fact, of

which I take judicial notice, that the average price of accommodation is far higher in

Bermuda (the residuary beneficiary’s country of origin) than it is in most other countries,

including the UK (the widow’s country of origin). These matters are material to

7

understanding both the identity of the key beneficiaries and the nature of the interests

created by the Will.

18. Firstly, in my judgment, there must be an implicit assumption when reading the Will that

its geographical scope is limited to the territorial limits of authority of the Trustees

themselves, which is only (absent an application for recognition of their appointment

abroad)

1

limited to the Probate jurisdiction of this Court. This is why, to oust that

presumption, the Testator devises in clause 2 “all of my real and personal property of

whatsoever nature and wheresoever situate

”. It follows that where, exceptionally, action

by the Trustees is contemplated abroad logically one would expect to see the foreign

element expressly spelt out.

19. This approach appears to be adopted in the Will. The location of various items of

personalty presumably located in Bermuda is not mentioned (clause 2(d), (e), (f), (g) and

(h)); however the location of a gift of monies located in Switzerland is (clause 2(i)). It is

in this light significant that, when defining the Plaintiff’s right to require the Trustees to

“purchase another house [etc.]”, the Will omits the words “in Bermuda or abroad”.

20. Secondly, it is noteworthy that the Testator has limited the widow’s interest in the

Property, or its replacement, in a way which is consistent with her never acquiring a full-

blown legal interest in the existing house or its capital proceeds. This supports more than

it undermines the inference that it was never contemplated that if the house was sold a

replacement would be purchased abroad; because the widow’s interest was limited for all

purposes in a manner designed to comply with Bermuda immigration law as it was at the

date of the Will. The highly unusual interest devised to the Plaintiff only makes sense in

the peculiar legal landscape of Bermuda and the immigration restrictions relating to land

which existed at the date of the Will and the Testator’s death. The Will could easily have

made express provision for the creation of a far more straightforward life interest in any

overseas property bought with the proceeds of sale of the Property, if such overseas

purchases were contemplated as potentially taking place. The Will did not make such

express provision.

21. Thirdly, I find that the interest created in favour of the Plaintiff in the Property, read in

conjunction with the residuary provisions for the 3

rd

Defendant, also make it difficult to

construe the relevant terms of the Will as contemplating the Trustees purchasing a

replacement house abroad. The crucial provisions read as follows:

“If Amanda so desires, my Trustees shall sell the House and purchase another

house, condominium or apartment for her as long as the sale proceeds from the

House are sufficient for such purpose (and if not, then any shortfall shall be made

up by her). If there is a surplus of funds from the sale of the house then such

surplus of funds shall be deposited in an interest bearing account (or otherwise

soundly invested) with income or interest accruing for the benefit of Amanda

until her death or remarriage. In any event the House or its proceeds of sale, or

1

Of course, the need for recognition might not arise if title to the property was formally vested in the Trustees, as

may have already occurred.

8

any investments into which it may be transmuted shall (after the death or

remarriage of my said wife) be held by my Trustees on the trusts contained in sub

clause (j) below.”

22. It is a notorious fact that Bermuda real estate is some of the most expensive real estate in

the world. The 3

rd

Defendant, who is entitled in remainder to own the House or its capital

proceeds outright after the death or remarriage of the Plaintiff, is Bermudian. In my

judgment plain words are required to justify the conclusion, in the peculiar context of the

Will read as a whole, that “purchase another house [etc.]” should be construed as

contemplating purchasing another house abroad. Assuming Mr. Diel is right that the

Plaintiff can unilaterally choose what property she wishes the Trustees to buy, she could

potentially sell a $1 million property, purchase a $100,000 property abroad, live off the

interest on $900,000 for the rest of her life, depriving the residual beneficiary of any

capital appreciation on 90% of the capital value of the Property

2

over many years. Such a

result would be wholly inconsistent with the relative nature and extent of the devises to

the widow and daughter respectively. On the other hand, any other property bought for

the Plaintiff to reside in Bermuda is likely to have a higher average capital value (or

would have been so likely at the Testator’s death) than the average in most other

jurisdictions (such as the UK, the Plaintiff’s apparent country of origin).

23. Fourthly, the Plaintiff’s interest is defined in such a way as to take into account the fact

that she might choose to live abroad, as Mr. Kessaram pointed out:

“Amanda shall be allowed to live in the House or, if she so desires, it shall be

rented with the income therefrom being paid to her after deduction of a

suitable amount to enable my Trustees to meet the maintenance expenses of

the House.”

24. This is in my judgment a dominant clause which applies to any replacement property

which may be purchased as well. In other words, the income generated by the Property or

its proceeds enures for the benefit of the Plaintiff to cover her reasonable accommodation

expenses if she elects not to occupy the Property (or its replacement). So the construction

contended for by the Trustees in no way ties the Plaintiff to residing in Bermuda; it

simply restricts the way in which she can utilize the gift should she choose to reside

overseas. This result is not inconsistent with the residual gift of full beneficial ownership

of a Bermuda house or its proceeds to a Bermudian child of the Testator.

25. For the above reasons, I find that clause 2(c) of the Will, properly construed, does not

entitle the Plaintiff to require the Trustees to sell the Property and buy alternative

accommodation for her outside of Bermuda.

2

This scenario and these figures are used for illustrative purposes only.

9

Does the Will confer a duty or a power upon the Trustees in terms of complying

with the Plaintiff’s request to purchase “another house”?

26. In my judgment the Will unambiguously imposes a duty on the Trustees to purchase such

other property as she chooses upon the sale of the Property. I accept Mr. Diel’s

submission that this is the only sensible view flowing from the fact that the widow is

required to make up any deficiency between the sale proceeds of the Property and its

replacement. The position may well be

3

different as regards the investment of any surplus

funds where the Trustees appear to have an implied power to ensure that any such funds

are “soundly invested” so that the capital can be protected for the residuary beneficiary:

“If Amanda so desires, my Trustees shall sell the House and purchase another

house, condominium or apartment for her as long as the sale proceeds from the

House are sufficient for such purpose (and if not, then any shortfall shall be

made up by her). If there is a surplus of funds from the sale of the house then

such surplus of funds shall be deposited in an interest bearing account (or

otherwise soundly invested) with income or interest accruing for the benefit of

Amanda until her death or remarriage.”[emphasis added]

Conclusion

27. For the above reasons, I conclude (a) (not without difficulty) that the Will does not entitle

the Plaintiff to require the Trustees to sell the Property and purchase other

accommodation outside of Bermuda; and (b) (with little difficulty) that the Will does

impose a duty upon the Trustees to follow the Plaintiff’s wishes in terms of selling the

Property and purchasing alternative accommodation for her within Bermuda. My

provisional view is that the costs of all parties ought to be payable out of the estate.

Dated this 8

th

day of April, 2011 ____________________

KAWALEY J

3

This point was not addressed in argument; a provisional view only is expressed.