(1922) 31 CLR 268
Glenn v Commissioner of Land Tax (Cth) [1915] HCA 57
[1842] EngR 629
(1841) 4 Beav 115
Source
Original judgment source is linked above.
Catchwords
(2005) 224 CLR 98
Duffield v Duffield (1829) 3 Bligh (NS) 260(1922) 31 CLR 268
Glenn v Commissioner of Land Tax (Cth) [1915] HCA 57[1842] EngR 629(1841) 4 Beav 115(1841) Cr & Ph 240
Judgment (6 paragraphs)
[1]
The Claim
1HIS HONOUR: In this proceeding, the Plaintiffs, Peter Arnott and Charles Park White, the executors of the Will of Gerdia Lydia Kiss ("the deceased") seek the opinion, advice and direction of the court in respect of the following questions:
"a. Whether the Plaintiffs would be justified in dividing and distributing the rest and residue of the Deceased's estate equally to the grandchildren of the Deceased (namely Daniel Kiss, Kerryn Kiss [sic], Benjamin Kiss and Brenton Kiss) in accordance with the terms of the Will of the Deceased as soon as is reasonably practical to do so without waiting for each or any of those grandchildren to attain the age of 45 years.
b. If the answer is 'No' are the Plaintiffs prohibited from dividing and distributing the rest and residue of the Deceased's estate to the Deceased's grandchildren until they each attain their 45th birthday?"
2The Plaintiffs did not join any Defendant as a party to their application.
3Whilst the two questions are framed as a claim for judicial advice, in reality, and in the events that occurred, the application was really one concerning the proper construction of the deceased's Will which she made on 21 March 2011, probate in common form of which was granted by this court to the Plaintiffs on 22 May 2013.
4Following the matter being listed for hearing before me, and after I had an opportunity to consider the documents on the court file, I requested my Associate to send, to the solicitors acting for the Plaintiffs, an email, dated 24 September 2014, which was in the following terms:
"This matter is listed for hearing on Tuesday, 30 September 2014.
His Honour assumes that the only submissions to be made on behalf of the Plaintiffs are those in the advice of Mr Flaherty. If further submissions are to be made, then those submissions should be delivered to me, in hard and soft copy, by 4:00 p.m. on 26 September 2014.
His Honour wishes to know whether any notice of the application has been given to the deceased's son ..., who is the father of the residuary beneficiaries. He may be a necessary party to the proceedings (which appears to be, in reality, a construction suit.)
In any event, his attitude to the distribution of the estate should be ascertained and should be the subject of evidence.
Your prompt attention to this matter would be appreciated."
5At the hearing, Mr D Neggo of counsel appeared for the deceased's son, Andrew Mark Kiss. Mr Neggo informed the court that the deceased's son opposed the distribution of the residuary estate to each of the grandchildren. He indicated that he had written submissions to file going to the proper construction of the deceased's Will. Without opposition, the submissions were received and they will remain on the court file.
6The views of the grandchildren of the deceased appeared from the written advice of Mr D M Flaherty of counsel (who appeared at the hearing for the Plaintiffs), a copy of which advice was attached to the Statement of Facts (Ex. A): "All of the residuary beneficiaries consent to the early distribution of the deceased's estate".
7I have taken the consent of the grandchildren to mean that they are content for the estate to be distributed equally before each attains the age of 45 years, notwithstanding that one might die before reaching that age, with the possible result that those who survive, and who attain the age of 45 years, would share the part of the estate of that grandchild who died before attaining the age of 45 years. In that circumstance, the result would be that the share of the others, or other, who did reach that age, would be increased.
8The hearing proceeded upon the basis that Mr Kiss would be joined as a party to the proceedings and that the court would then determine the proper construction of the deceased's Will. I made an order that Andrew Mark Kiss be joined as a party/Defendant, upon the basis that he is a person whose joinder as a party is necessary to the determination of all matters in dispute in the proceedings: Uniform Civil Procedure Rules (2005) (NSW), Rule 6.24(1). He is a person who would be entitled on intestacy if certain events, to which I shall return, occur. The determination of the proper construction of the deceased's Will, as a result of the joinder, will bind all affected parties. I also now order that the filing of an amended Summons be dispensed with.
[2]
Factual Background
9The following background facts appear to be uncontroversial.
10The deceased died on 16 February 2013, aged about 90 years.
11The deceased left, surviving her, a son, the Defendant. He is the father of Daniel, who is aged 26 years, Karryn, who is aged 24 years, Benjamin, who is aged 22 years, and Brenton who is aged 19 years. Each of Daniel, Karryn, Benjamin and Brenton is a grandchild of the deceased. The deceased had no other children or grandchildren.
12Clause 3 of the deceased's Will provided for the devise of certain identified real estate to the Defendant "for his sole use and benefit" upon certain conditions. The Clause went on to provide:
"...if he shall not survive me for at least 30 days then to my Trustees who shall stand possessed of my real property known as xx xxxx, Castlecrag NSW and the adjacent Boat Shed at xx xxxx, Castlecrag NSW, and to hold the same UPON TRUST for such of my grandchildren DANIEL KISS, KARRYN KISS, BENJAMIN KISS and BRENTON KISS who survive me and attain their respective age of 45 years and in equal shares. By way of clarification each grandchild shall take their share of this gift as they attain their 45th birthday and need not wait for the remaining grandchildren to attain their 45th birthday."
13(There was other litigation concerning the estate involving the devises made to the Defendant, which litigation was resolved, when, on 24 May 2014, I made orders by consent of the parties. It is unnecessary to refer to that litigation, or to the orders that were made, as they do not bear on the questions for determination in the matter currently before me.)
14Clause 4 of the deceased's Will provided:
"4. My Trustees shall hold the rest and residue of my estate, free of all debts, funeral and testamentary expenses and any death, estate or succession duties, and free of any mortgage debts as follows:-
To divide the rest and residue of my estate equally between my grandchildren, DANIEL KISS, KARRYN KISS, BENJAMIN KISS and BRENTON KISS who survive me and attain the age of 45 years. By way of clarification each grandchild shall take this gift as they reach their 45th birthday and need not wait for the remaining grandchildren to attain their 45th birthday."
15Clause 5 of the deceased's Will referred to the powers of the trustees to sell, postpone the sale of, lease, mortgage and manage the deceased's estate.
16Clause 6 gave the trustees additional powers of reinvestment.
17Clause 7 gave the trustees further additional powers including, in sub-paragraph (b), a power to "apply for the maintenance, education, advancement or benefit, of a beneficiary, the whole or any part of the capital or income of that share of my estate to which that beneficiary is entitled or may in future be entitled and the receipt of the payee is an absolute discharge". The Clause commences with the words "My trustees may", which suggests that they have a discretion to apply the capital or income for the purposes identified.
18Importantly, there was no gift over of the residue in the Will in the event that one, or more, of the deceased's named grandchildren survived the deceased, but did not attain the age of 45 years. Nor did the Will, apart from the discretionary power of advancement in Clause 7(b), provide for the distribution of income pending each grandchild attaining the age of 45 years.
19The Plaintiffs estimate the current value of the deceased's residuary estate to be about $4.0 million. None of the residue, or the income derived, has been distributed pursuant to the power in Clause 7(b) of the Will.
20There was no dispute that, if all the grandchildren died before attaining the age of 45 years, there would be an intestacy in relation to whole of the gift of residue, with the result that the residue would pass to the Defendant, the only child of the deceased.
[3]
Submissions
21Mr Flaherty, in a written Memorandum of Advice dated 18 July 2014, sent to the Plaintiffs, which founded his submissions, put the competing constructions of the residuary clause in the deceased's Will in the following way:
"Here the obvious question is whether each of the grandchildren have an immediate vested interest in the residue of the Deceased's estate 'even though the right to possession or enjoyment of the property is postponed' until they attain the age of 45 years or whether their interest in the residence is contingent upon their attaining the age of 45 years. See Austin & Anor v Wells [2008] NSWSC 1266 at [12].
If it is the former (i.e. they each have an immediate vested interest in the residue of the Decease's [sic] estate) then the so called 'rule' in Saunders v Vautier may apply. See CPT Custodians Pty Ltd v Commissioner of State Revenue (Vic) 224 CLR 98 at 118 - 120; Beck v Henley [2014] NSWCA 201 at [32] - [42]; Austin v Wells [supra] at [10] - [13].
If it is the latter (i.e. they do not each have an immediate vested interest and their respective interest will not vest unless and until they attain the age of 45 years) then the 'rule' in Saunders v Vautier cannot apply. See the authorities referred to above. See Simpson v Trust Company Fiduciary Services Ltd [2009] NSWSC 912 at [22] - [26]; Jacob's Law of Trusts in Australia by Heydon & Leeming 7th edition at [2308] - [2312] and the authorities referred to therein.
In those latter circumstances before each of the grandchildren can take away interest in the Deceased's estate (but subject to the limited power of advancement in clause 7 (b) they would each have to satisfy the contingency (i.e. of attaining the age of 45 years). Given the relatively young ages of the grandchildren (see above) the clients could be administering the trust of the Deceased's residuary estate for the next twenty five (25) years or even more."
22Mr Flaherty then went on to provide four reasons for the conclusion that the interest of the grandchildren is vested and that the rule in Saunders v Vautier [1841] EWHC Ch J 82; [1842] EngR 629; (1841) 4 Beav 115; (1841) Cr & Ph 240; 41 ER 482 can apply to the deceased's Will. He stated, firstly, that there is no gift over clause in the Will; secondly, that the court will normally construe a Will so as to avoid an intestacy or partial intestacy; thirdly, that there is no clause in the deceased's Will that deals with the accumulation of income pending the grandchildren reaching the age of 45 years, with the result that the income will accumulate and pass with the corpus; and finally, that there is a power of advancement, which, whilst not conclusive, is, when taken with the other matters, supportive of the conclusion that the gifts to the grandchildren are likely to be vested and not contingent.
23Mr Neggo submitted in writing:
"6. ... that the gift in clause 4, on its proper construction, has two important characteristics:
7. First, it is a 'class gift', being 'a gift of an aggregate sum to a body of persons uncertain in number at the time of the gift, to be ascertained at a future time, and who are all to take in equal or in some other definite proportions, the share of each being dependent for its amount upon the ultimate number of persons': Lockrey v Ferris [2011] NSWSC 179 PER Hallen J at [50], citing Black's Law Dictionary. In this regard, it is significant to note that the division of the rest and residue of the estate is not to commence to occur until at least one member of the class can be identified.
8. Secondly, it is a contingent gift, in the sense that in order to claim a right to the gift, any claiming beneficiary has to satisfy the conditions set out in the will in order to fall within the class. There are three elements to be satisfied:
a.That they be grandchildren. (In this regard, the fact that each of the grandchildren are specifically named does not mean that clause 4 cannot be a class gift: Tompkins v Simpkins 44 CLR 546 per Dixon J at 557 and Evatt J at 561; Lockrey v Ferris [2011] NSWSC 179 per Hallen J at [57]. What is required is to look at the language of the will to see what the testator intended.)
b.That they survived the deceased.
c.That they attain the age of 45 years. This strongly indicates a contingent rather than a vested gift, the age of 45 years being a quality or description which they must possess in order to claim under the gift: see Re Butler [1980] Qd R 601 per Connolly J at 604:E; Austin v Wells [2008] NSWSC 1266 per White J at [25]."
24He then submitted that the rule in Saunders v Vautier was not enlivened and that, upon the proper construction of the deceased's Will, the Plaintiffs could not divide and distribute the residuary estate amongst the four named grandchildren equally, other than when each attained the age of 45 years.
25Although Mr Neggo addressed the presumption against an intestacy, his submissions seemed to accept that the possibility of an intestacy (described as a "very remote possibility") exists.
[4]
The Principles
26The determination of this matter requires consideration of the principles relating to the construction of wills and the rule in Saunders v Vautier, to which reference was made in the submissions of each of the parties.
27In relation to the construction of a testamentary document, I wrote in Warton v Yeo [2014] NSWSC 494, at [48] - [54]:
"The Law
The object of a will construction suit is to ascertain the intention of the deceased as expressed in his, or her, will, or codicil, when it is read as a whole. The intention of the maker of the testamentary instrument has been referred to as the 'pole star' in the construction of wills: Thomson v Thomson [2008] VSC 375.
Campbell JA, in Byrne v Macquarie Group Services Australia Pty Ltd [2011] NSWCA 68, at [2], wrote, in another context, that construction is a process of coming to understand the meaning of a text, which meaning is disputed. It involves a consideration of the disputed text in itself, both as a whole, and in its constituent parts.
Recently, in Marley v Rawlings [2014] UKSC 2; [2014] 2 WLR 213, a decision of the Supreme Court of the United Kingdom, which involved the rectification of wills, Lord Neuberger (with whom Lord Clarke, Lord Sumption and Lord Carnwath agreed), wrote at [19] - [25]:
'When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party's intentions. In this connection, see Prenn at 1384-1386 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, per Lord Wilberforce, Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30.
When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, para 64, 'No one has ever made an acontextual statement. There is always some context to any utterance, however meagre.' To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396, that '[c]ourts will never construe words in a vacuum'.
Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts - see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, per Lord Steyn at 770C-771D, and Lord Hoffmann at 779H-780F.
In my view, at least subject to any statutory provision to the contrary, the approach to the interpretation of contracts as set out in the cases discussed in para 19 above is therefore just as appropriate for wills as it is for other unilateral documents. This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th edition, chapter 15 and the recent supplement supports such an approach as indicated in RSPCA v Shoup [2011] 1 WLR 980 at paras 22 and 31). Indeed, the well known suggestion of James LJ in Boyes v Cook (1880) 14 Ch D 53, 56, that, when interpreting a will, the court should 'place [itself] in [the testator's] arm-chair', is consistent with the approach of interpretation by reference to the factual context.
However, there is now a highly relevant statutory provision relating to the interpretation of wills, namely section 21 of the 1982 Act ('section 21'). Section 21 is headed 'Interpretation of wills - general rules as to evidence', and is in the following terms:
'(1) This section applies to a will -
a) in so far as any part of it is meaningless;
b) in so far as the language used in any part of it is ambiguous on the face of it;
c) in so far as evidence, other than evidence of the testator's intention, shows that the language used in any part of it is ambiguous in the light of surrounding circumstances.
(2) In so far as this section applies to a will extrinsic evidence, including evidence of the testator's intention, may be admitted to assist in its interpretation.'
In my view, section 21(1) confirms that a will should be interpreted in the same way as a contract, a notice or a patent, namely as summarised in para 19 above. In particular, section 21(1)(c) shows that 'evidence' is admissible when construing a will, and that that includes the 'surrounding circumstances'. However, section 21(2) goes rather further. It indicates that, if one or more of the three requirements set out in section 21(1) is satisfied, then direct evidence of the testator's intention is admissible, in order to interpret the will in question.
Accordingly, as I see it, save where section 21(1) applies, a will is to be interpreted in the same way as any other document, but, in addition, in relation to a will, or a provision in a will, to which section 21(1) applies, it is possible to assist its interpretation by reference to evidence of the testator's actual intention (eg by reference to what he told the drafter of the will, or another person, or by what was in any notes he made or earlier drafts of the will which he may have approved or caused to be prepared).'
Of course, in New South Wales, in relation to the estate of a person who dies after 1 March 2008, it is necessary to consider the Succession Act 2006 (NSW), which, so far as is relevant, by s 32, provides:
'32 Use of extrinsic evidence to construe wills
(1) In proceedings to construe a will, evidence (including evidence of the testator's intention) is admissible to assist in the interpretation of the language used in the will if the language makes the will or any part of the will:
(a) meaningless, or
(b) ambiguous on the face of the will, or
(c) ambiguous in the light of the surrounding circumstances.
(2) Despite subsection (1), evidence of the testator's intention is not admissible to establish any of the circumstances mentioned in subsection (1) (c).
(3) Despite subsection (2), nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.'
What has been described as the ten 'incontestable principles' for the construction of wills described by Isaacs J in Fell v Fell [1922] HCA 55; (1922) 31 CLR 268, 273-275 should be remembered:
'Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence as is necessary in order to enable us to understand the words which the testator has used'...
'The instrument ... must receive a construction according to the plain meaning of the words and sentences therein contained'. But you must look at the whole instrument, and inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it...
'If the will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has, on the whole will, sufficiently declared'...
An inference cannot be made 'that did not necessarily result from all the will taken together'... A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed...
The court 'cannot give effect to any intention which is not expressed or plainly implied in the language of' the 'will'... 'You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication'...
'If the contents of a will show that a word has been undesignedly omitted, or undesignedly inserted, and demonstrate what addition by construction, or what rejection by construction, will fulfil the intention with which the document was written, the addition or rejection will by construction be made'...
'When the will is in itself incapable of bearing any meaning unless some words are supplied, so that the only choice is between an intestacy and supplying some words; but even there, as in every case, the court can only supply words if it sees on the face of the will itself clearly and precisely what are the omitted words, which may then be supplied upon what is called a necessary implication from the terms of the will, and in order to prevent an intestacy'...
'There are two modes of reading an instrument: where the one destroys and the other preserves, it is the rule of law, and of equity following the law in this respect (for it is a rule of common sense...), that you should rather lean towards that construction which preserves, than towards that which destroys'...
If on reading the will you can see some mistake must have happened, 'that is a legitimate ground in construing an instrument, because that is a reason derived not dehors the instrument, but one for which you have not to travel from the four corners of the instrument itself'...
[5]
Determination
53As to the intention of the deceased as disclosed by the words of the whole of her Will, I am satisfied that:
(a) The fact of executing a will with the necessary formality, establishes that the deceased did not intend that her estate would be distributed on intestacy: In the Estate of Epheser, Deceased [2008] SASC 311, at [50]. It is clear also, from the terms of Clauses 3 and 4 of the Will, that her intention was to deal with the whole of her estate in the Will and that she did not intend any part to be distributed on intestacy.
(b) The deceased's primary intention was to benefit her immediate family, being her son and her grandchildren. There were, in this respect, devises to her son, and the gift of the residue to her four named grandchildren equally as set out in the Clauses to which I have referred.
(c) Clause 4 is silent as to whether the grandchildren take the gift of residue as joint tenants, or tenants in common. A direction to "divide" in a will usually creates a tenancy in common rather than a joint tenancy so that divided shares do not pass to the survivors within the class specified: Halsbury's Laws of England, 4th ed, vol 50 at [571]; Tasmanian Perpetual Trustees Limited v Marshall [2014] TASSC 26, at [14]. Similarly, the use of the words "in equal shares" is suggestive of a tenancy in common.
However, I have earlier noted the effect of s 42 of the Succession Act. Other than the use of the words referred to, which is not, necessarily decisive, there is no contrary intention disclosed in the Will.
(d) The division of the residuary estate in Clause 4 of the Will is to be upon each of the named grandchildren respectively attaining the particular age there specified. There is no immediate gift followed by a direction postponing payment. Rather, the Clause requires the trustees to "hold the rest and residue... [and] divide [it]... equally... between my grandchildren... who survive me and attain the age of 45 years". Therefore, Clause 4 imposes, as conditions precedent upon the gift of residue, survival and attaining the particular age, leaving the gift contingent unless and until each event happens. The division of residue is deferred, not merely until the lapse of a definite interval of time, which will certainly arrive, but until an event, which may or may not happen, with the result that the effect is to render the gift of residue contingent.
(e) Each grandchild will "take" his, or her, share of the residuary estate upon attaining the specified age and each will not have to await the others attaining that age. If one of the grandchildren does not attain the specified age, the surviving grandchildren who do, will be entitled to an equal part of the share of residue to which the deceased grandchild would have been entitled.
(f) In the event that none of the grandchildren attained the specified age, there will be an intestacy, with the result that the deceased's son will become entitled to the whole of the residuary estate.
54Of course, I have considered whether the words "shall take this gift as they reach their 45th birthday" means that there was an absolute gift to each of the grandchildren, and that it was only the payment, and not the vesting, that was postponed until each attained the specified age. However, I think that, if that were intended, the words in the Clause that follow the gift "[b]y way of clarification" would not have been included.
55Furthermore, Clause 3 of the deceased's Will provides for the devises to the Defendant to be "for his absolute use and benefit". Those words do not appear in Clause 4 in relation to the gift of residue to the grandchildren.
56A factor militating strongly in favour of finding that a gift is immediately vested in interest, with payment postponed, is a provision that the recipients are to receive some present enjoyment in the property, even though they do not take until a later date. However, there is no present right to enjoyment given to any of the grandchildren who take, only, upon reaching his, or her, 45th birthday. Also, as stated, the postponement of division and "taking" is not because there is a prior gift for life.
57This leads to a consideration of the relevance of the power given to the Plaintiffs, as trustees, to advance capital or income for the maintenance, education, advancement or benefit of a beneficiary, to which the beneficiary is entitled, or who, in the future, may be entitled. In particular, I have remembered the rule of construction, stated by Astbury J in In re Ussher, Foster v Ussher [1922] 2 Ch 321, as follows, and whether it would apply:
"The rule now is beyond question that a gift that would otherwise be contingent, followed by a gift of the 'whole income' to or for the benefit of the person in question, will vest what would otherwise have been only a contingent gift."
58However, it is to be noted that the relevant Clause in the deceased's Will provides merely a power to advance, at the trustees' discretion, the intermediate income or capital. It is not a gift thereof, or a trust, or direction, to apply the grandchild's share of income or capital, but merely a provision that they may do so.
59Thus, the present case is governed by the decision of Parker J in In re Hume, Public Trustee v Mabey [1912] 1 Ch 693, in which it was said:
"I cannot, however, find any case in which the creation in the trustees of a mere discretionary power to apply the income of an expectant share for the maintenance or benefit of the beneficiary, with a direction to accumulate the income not so applied for the benefit of the persons who ultimately attain a vested interest in the share in question, has been held to vest a gift originally given upon attaining a specified age. I do not see how it can in principle have this effect, for the donor is evidently contemplating not that the beneficiary will in some form or other enjoy the intermediate income, but that he will not so enjoy it unless the discretionary power be exercised. Further, I have come to the conclusion that there is a broad distinction, for the purposes I am considering, between a gift to a class upon attaining a specified age and a gift to such members of a class as attain a specified age. In the latter case clearly no one is intended to take unless he attains the age in question. It is no longer a question of construing as vested a gift which is only prima facie contingent, but of adding to the class of beneficiaries".
60I gain support for the view I have expressed by what was said by Connolly J in Re Butler [1980] QdR 601, at 603-604:
"...Mr. Watson also relies upon the power to advance the whole or any part of the expectant share of any infant child during his or her minority. The rule is clear that where there is a gift of the intermediate income the interest is taken to vest at the date of the testator's death. The same rule applies where the whole of the income is given for maintenance until the time fixed for payment: and in re Ussher, Foster v. Ussher [1922] 2 Ch 321 Astbury J. held that a trust to apply the whole or such part as the trustees should think fit of the intermediate income in favour of the legatee was sufficient to vest what would otherwise be a contingent gift. Where however there is merely a power to advance the intermediate income, and not a gift thereof or a trust or direction to apply it, the maintenance or advancement clause does not constitute an indication of early vesting. See In Re Blackwell, Blackwell v. Blackwell [1926] Ch 223. It is, as Warrington L.J. said at p. 237, perfectly neutral so far as the interpretation of the actual gift is concerned."
61Also see Austin v Wells, per White J, at [29].
62Accordingly, the Clause in the deceased's Will to which reference is made does not constitute an indication of early vesting, or vest in possession what would otherwise be a contingent gift.
63There being no gift over, it is necessary to consider the presumption against intestacy (Jenkins v Stewart [1906] HCA 35; (1906) 3 CLR 799, at 804; Fell v Fell [1922] HCA 55; (1922) 31 CLR 268, at 275-276, per Isaacs J, at 279) which requires the court to prefer a construction which is reasonably open that will avoid an intestacy. It has been said that the presumption against intestacy "is not a strong presumption" and the Court should not "lean too heavily against a construction that produces an intestacy; and certainly cannot, in order to avoid that result, misconstrue the language of the instrument": Re Wragg Dec'd [1959] 1 WLR 922, at 929 per Lord Evershed MR; Marks v Pope [2001] NSWSC 105, per Young J (as his Honour then was), at [17].
64With respect, even when one considers this rule of construction, the proper construction provides that, for the interest of any grandchild to vest, he or she must not only have survived the deceased, but also have attained the age of 45 years. The former condition has been satisfied but the latter has not.
65It follows that in this case, that there is no gift to anyone who does not answer the whole of the requisite description. The gift is not to the named grandchildren, but the named grandchildren who shall attain 45 years of age. In other words, there is, presently, no named grandchild who completely answers the description which the deceased has given to those who are to be residuary beneficiaries, and, therefore, there is no person in whom the residuary estate has vested.
66Accordingly, in my view, the residuary beneficiaries presently are unable to terminate the trust in the Will and the Plaintiffs are not entitled to do so at their behest.
67I declare that, upon the true construction of the Will of Gerdia Lydia Kiss, each of the residuary beneficiaries has an interest in the residuary estate contingent upon him, or her, respectively attaining the age of 45 years.
68So as to avoid doubt, in answer to the questions posed for the advice of the court, the Plaintiffs would not be justified in dividing and distributing the rest and residue of the deceased's estate equally to the grandchildren of the deceased in accordance with the terms of the Will of the deceased as soon as is reasonably practical to do so without waiting for each of those grandchildren to attain the age of 45 years respectively. Subject to exercising the power of advancement referred to in Clause 7(b) of the deceased's Will, they may not divide and distribute the rest and residue of the deceased's estate to the deceased's grandchildren until each, respectively, attains his or her 45th birthday, unless the deceased's son, Andrew Mark Kiss, consents to the distribution prior to that date.
69There was no dispute that an order should be made that the Plaintiffs' costs, calculated on the indemnity basis, and the Defendant's costs, calculated on the ordinary basis, of the application, should be paid, or retained, as the case may be, out of the residuary estate of the deceased. I so order.
[6]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 14 October 2014
'The mind never inclines towards intestacy: that is a dernier resort in the construction of wills'...
(Omitting citations)
Finally, in Coorey v Coorey (Supreme Court (NSW), Powell J, 22 February 1986, unrep), Powell J said, in a passage approved by Bryson J in Perpetual Trustee Co Ltd v Wright; Re Will of James Paul Gee Cox Junior, Deceased (1987) 9 NSWLR 18, at 33, and repeated again by Hamilton J in Hatzantonis v Lawrence [2003] NSWSC 914, by Gzell J in Peoples v Simpson [2005] NSWSC 355, and by Campbell JA in Fairbairn v Varvaressos [2010] NSWCA 234, at [19]:
'... It seems to me that one's task is, first, if it be possible, to ascertain what was the basic scheme which the deceased had conceived for dealing with his estate and then, so to construe the will as, if it be possible, to give effect of the scheme so revealed.'
In Muir v Winn [2009] NSWSC 857, Bryson AJ added, at [24]:
'It is necessary to seek to understand the scheme of a testator's dispositions. Where the terms of the will are perfectly clear search for the scheme may be of little use, but where the language is obscure or the effects of the literal reading and the reasoning impliedly underlying it are startlingly unlikely, as in this case, the scheme of dispositions is very important.'"
28There was really no dispute about these principles.
29In relation to Saunders v Vautier, J McGhee QC, in Snell's Equity (31st ed, 2005, Sweet & Maxwell), at paragraph 27-25, states:
"Although the beneficiaries cannot in general, control the trustees while the trust remains in being or commit them to a particular dealing with the trust property, they can if sui juris and together entitled to the whole beneficial interest, put an end to the trust and direct the trustees to hand over the trust property as they direct; and this is so even if the trust deed contains express provisions for the determination of the trust. This principle also applies where there is an absolutely vested gift made payable on a future event, with a direction to accumulate the income in the meantime and pay it with the principal; for in Saunders v Vautier (1841) 4 Beav. 115, affirmed Cr and Ph 240, the court declined to enforce a trust for accumulation in which no person but the beneficiary had any interest. In other words, if an accumulation is directed exclusively for the benefit of a beneficiary, the moment he is sui juris he may put an end to it and demand the property. A man who is sui juris may do what he likes with his own property.
Again, where trustees are directed at their absolute discretion to pay or apply the whole or any part of the income of the fund to or for the benefit of A and are told to pay or apply to or for the benefit of B any part of the income not applied for A's benefit, A and B, if both sui juris, can together compel the trustees to pay the whole income as they direct, for they are the sole owners of each slice of income. But the rule does not apply if other persons have possible interests in the income, so that A and B alone could not control the trustees' application of the income."
30The modern formulation of the rule in Saunders v Vautier is set out in CPT Custodian v Commissioner of State Revenue [2005] HCA 53; (2005) 224 CLR 98, at 119, [47] (citations omitted), as follows:
"Under the rule in Saunders v Vautier, an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation."
31The basis of the rule has been explained in J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (7th ed, 2006, LexisNexis), at [2314], in the following way:
"It has been said that the principle upon which the rule is based is that any restriction on the enjoyment by a beneficiary who is sui juris of a vested interest is inconsistent with the nature of that interest and must be disregarded. Thus understood, the principle often will involve the denial of the intentions of the settlor or testator...".
32Estates may be vested in interest, or vested in possession, the difference being between a present fixed right of future enjoyment, where the estate is said to be "vested in interest", and a present right of present enjoyment of the right, where the estate is said to be "vested in possession" (See: Glenn v Commissioner of Land Tax (Cth) [1915] HCA 57; (1915) 20 CLR 490, at 496, 502; Dwight v Commissioner of Taxation (1992) 37 FCR 178, at 192).
33However, in Glenn v Commissioner of Land Tax, Griffith CJ continued, at 498:
"In my opinion, therefore, when the equitable rights created by a will, which may be as diverse as the testator thinks fit, are such that the beneficial enjoyment of property by a particular object of his bounty cannot begin until the expiration of a determinate or indeterminate period, there is no present estate in possession in that property in any person other than the trustees of the will. In one sense, perhaps, the persons who are for the time being entitled to share in the fruits of the land may collectively be called the equitable owners, but that point is not material to the present case."
34It is said that a "vested interest" is "an interest in which the identity of the person who takes the interest is known and there is no condition precedent to the interest falling into possession other than determination of the prior particular estate": P Nygh and P Butt, Butterworths Australian Legal Dictionary (1997, LexisNexis).
35In W J Williams, C H Sherrin, R F D Barlow and R A Wallington, Williams' Law Relating to Wills (6th ed, 1987, Butterworths), at 676, the learned authors state:
"A gift to a person 'at', 'if', 'as soon as', 'when', or 'provided' he attains a certain age may or may not mean that the gift is not to vest until that age is attained. Such a gift, without further context to govern the meaning of the words, is contingent, this being a quality or description which the donee must possess in order to claim under the gift."
36In T G Feeney, The Canadian Law of Wills (3rd ed, 1987, Butterworths), the learned author states, at 259-260:
"A contingent interest is one that is subject to the prior happening of an event which may never happen, for example, the birth of a child, the attainment of a certain age, or marriage. For instance, it may be subject to the condition precedent that the donee become a citizen. Sometimes, the condition is the satisfaction of some requirement not personal to the donee, for example, a condition that some other person do something or that another donee survive or not survive an event. Usually where the gift is contingent the words of futurity are introduced by the conjunction 'if', but prima facie the construction will be the same and the legacy will be treated as contingent, in the first instance at least, when the reference to the future event is introduced by the word 'when'. Similarly, the cases hold that in a bequest to A, words such as 'at' a given age, or 'upon' attaining a given age, or 'as' he shall attain, or 'from and after' his attaining a given age, prima facie introduced a contingent gift."
37And at 263 and 264, the learned author states:
"Where, however, the reason for the postponement of the gift is one personal to the donee, prima facie the gift is contingent. This may be shown by words descriptive of the donee or by words that state some qualification or other that the testator requires of the donee if he is to become the object of the testator's bounty. The testator may show that he wishes the donee to become a lawyer, or to marry, or, in the case of a class gift, that the members attain a specified age. The testator may show this so clearly, for example, by a devise or bequest to 'the first son of A to become a lawyer', 'the first daughter of A to marry', or 'only such children as shall attain the age of 25', that there can be no question but that the gift is contingent. On the other hand, it may not be so very clear that the gift is subject to a condition precedent, but in such a case the court, seeing that the reason for the postponement is one personal to the donee, will regard the gift as contingent, at least the first instance."
38Some of the relevant considerations were discussed by Grant MR in Leake v Robinson (1817) 35 ER 979, at 987-988
"The attainment of twenty five is necessary to entitle any child to claim a transfer. It is not the enjoyment that is postponed; for there is no antecedent gift, as there was in the case of May v Wood (3 Bro CC 471), of which the enjoyment could be postponed. The direction to pay is the gift, and that gift is only to attach to children that shall attain twenty five.
... If there were an antecedent gift, a direction to pay upon the attainment of twenty five certainly would not postpone the vesting. But if I give to persons of any description when they attain twenty five, or upon their attainment of twenty five, or from and after their attaining twenty five, is it not precisely the same thing as if I gave to such of those persons as should attain twenty five? None but a person who can predicate of himself that he has attained twenty five, can claim anything under such a gift."
39In In re Francis [1905] 2 Ch 295, Swinfen Eady J held, in relation to the devise of two freehold houses to the testator's niece "when she shall attain the age of 25 years":
"Standing alone and not preceded by any intermediate interest, is contingent, and the attainment of 25 is condition precedent to the estate vesting in her. It is a case of a devise which is in form contingent, and which stands alone and without any context to enable the court to hold it to be vested."
40In Austin v Wells [2008] NSWSC 1266, the will provided for the residue "to vest in my said niece upon her attaining the age of 30 years". White J noted, at [12]:
"The point upon which this case turns is the requirement [under the rule in Saunders v Vautier] that the adult beneficiary have a vested interest. A person has a 'vested' interest in property if he or she has a certain interest in the property even though the right to possession or enjoyment of the property is postponed. Such a person has an estate vested in interest. The estate is vested in possession where the person has a present right of enjoyment. If the person's interest depends upon a contingency which may or may not occur, he or she does not have a vested interest, but a contingent interest."
41However, unless there is, in the will, an express intention to suspend, or postpone, vesting, a gift to persons already in existence is construed to vest immediately on the testator's death. In Duffield v Duffield (1829) 3 Bligh (NS) 260; 4 ER 1334, Lord Eldon wrote:
"The rights of the different members of families not being ascertained whilst estates remain contingent, such families continue in an unsettled state, which is often productive of inconvenience, and sometimes of injury to them. If the parents attaining a certain age be a condition precedent to the vesting estates by the death of their parents, before they are of that age, children lose estates which were intended for them, and which their relation to the testators may give them the strongest claim to.
In consideration of these circumstances, the judges from the earliest times were always inclined to decide that estates devised were vested; and it has long been an established rule for the guidance of the Courts of Westminster in construing devises, that all estates are to be holden to be vested, except estates, in the devise of which a condition precedent to the vesting is so clearly expressed, that the Courts cannot treat them as vested, without deciding in direct opposition to the terms of the will. If there be the least doubt, advantage is to be taken of the circumstance occasioning that doubt; and what seems to make a condition, is holden to have only the effect of postponing the right of possession."
42In other words, where there is a doubt about the time when a gift shall vest, there is a presumption that the testator intended the gift to be vested, subject to being divested, rather than it remain in suspense: Hickling v Fair [1899] AC 15, at 27. This is said to be a presumption in favour of early vesting.
43The rules of construction, to which I have referred, must give way to a plain indication in the will as to the deceased's intention. Such a contrary intention may be found, in a will, for example, by the deceased referring to the possibility of the beneficiaries dying "before attaining a vested interest", or the trusts of a share, or shares, failing, because "no person attains a vested interest in that share".
44Of course, those words do not appear anywhere in the deceased's Will. What does appear, however, are the words in Clause 7(b) relating to the application "for the maintenance, education, advancement or benefit, of a beneficiary, the whole or any part of the capital or income of that share of my estate to which that beneficiary is entitled or may in future be entitled and the receipt of the payee is an absolute discharge" (my emphasis).
45In Krstic v State Trustees Ltd [2012] VSC 344, McMillan J noted, at [15]:
"The rule in Saunders v Vautier operates to override a testator's intention to prevent the beneficiaries from taking their shares until reaching an age beyond majority. The rule has no operation unless all the persons who have any present or contingent interest in the property are ascertained, sui juris and consent. In those circumstances, the beneficiaries may put an end to the trust by directing the trustee to transfer the interest in the estate to themselves, notwithstanding any direction to the contrary in the trust instrument. The rule also applies 'where there is more than one beneficiary, even although their several interests are not all immediate but successive, provided they are unanimous in wishing to end the trust.' An example where the rule could not apply for this reason is the House of Lords decision of Berry v Geen. In that case, the Court refused to sanction the distribution of a fund held on trust for accumulation and payment of certain annuities, where it was possible that the accumulation might fail. Because, in those circumstances, the surplus income would be undisposed of and pass on an intestacy, a contingent interest was held by the next of kin. The Court held that it could not make the orders sought without the consent of the next of kin because to do so would or might destroy or prejudice their interests." (Omitting citations)
46Because it was referred to in Mr Neggo's submissions, I shall next refer to the principles relating to a class gift.
47In Kingsbury v Walter [1901] AC 187, at 191, Lord McNaghten wrote:
"In my opinion the principle is clear enough. When there is a gift to a number of persons who are united or connected by some common tie, and you can see that the testator was looking to the body as a whole rather than to the members constituting the body as individuals, and so you can see that he intended that if one or more of that body died in his lifetime, the survivors should take the gift between them, there is nothing to prevent your giving effect to the wishes of the testator.
I think this is a gift to a class ... I think it is pretty plain that the testator made one class of all his nephews and nieces, and intended that if any of them died during his lifetime the survivors should take."
48In G L Certoma, The Law of Succession in New South Wales (3rd ed, 1997, Thomson Reuters Lawbook Co), the learned author summarised the operation and purpose of the rule as to class gifts, at 178:
"Examples of class gifts are 'to my grandchildren', 'to my grandchildren A, B and C and such of my grandchildren hereafter born', 'to A, B, C and D if living'. The essence of a class gift is that if a potential member of the class cannot take, the shares of the remaining members are increased and so there is no question of the gift becoming partly undisposed of. The potential member may not be able to take for any one of a number of reasons such as death before the testator or before attaining a vested interest, express exception or revocation by the testator, attestation of the will, or the felonious killing of the testator. A true class gift must be distinguished from a series of independent gifts to the members of a class, the difference being that in the latter case the gift of each member of the class is quantified from the beginning as if each person had been given a separate gift and if any such gift fails it does not augment the shares of the remaining members of the class but passes as part of the residue or on intestacy as the case may be, for example, a gift equally to 'my nine grandchildren' or 'to the three children of A'. Gifts to several persons by name, number or reference are not usually true class gifts." (Footnotes omitted)
49Also see my decision in Lockrey v Ferris [2011] NSWSC 179, at [48] - [60].
50Two other matters should be noted. There is no gift of intermediate income in the deceased's Will. Section 34 of the Succession Act 2006 (NSW) provides that a "contingent, future, or deferred, disposition of property, whether specific or residuary, includes any intermediate income of the property that has not been disposed of by will".
51Section 42 of the Succession Act, which also applies in relation to a testator who died after 1 March 2008, provides:
"(1) A disposition of all, or the residue, of the estate of a testator that refers only to the real estate of the testator, or only to the personal estate of the testator, is to be construed to include both the real and personal estate of the testator.
(2) If a part of a disposition in fractional parts of all, or the residue, of the testator's estate fails, the part that fails passes to the part that does not fail, and, if there is more than one part that does not fail, to all those parts proportionally.
(3) This section does not apply if a contrary intention appears in the will."
52Neither counsel suggested that these sections do not apply in the present case.