Denison v Denison

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3500/99 ROBERT LESLIE DENISON & ANOR v DARCY LEIGH DENISON & ORS

JUDGMENT His Honour: 1 On 14 May 1974 Mary Edith Josephine Denison executed a deed of settlement ("the deed"). It appointed her husband, Robert Leslie Denison, and Reginald Bernard Barton as trustees of a trust for her grandchildren. On 1 July 1988 Reginald Bernard Barton was replaced as a trustee by Leon Edward Wruck. The present trustees are the plaintiffs in these proceedings. The deed by clause 1(a) provided: "1 The Trustees shall stand possessed of the Trust Fund and the income arising therefrom upon the following trusts namely: -- (a) UPON TRUST to pay the capital and income therefrom to such of the grandchildren of the Settlor (being not only the legitimate children of David Robert Denison, Peter Robert Denison and Mary Jane Denison but also such of their illegitimate children, if any, as may in the Trustees [sic] absolute discretion be recognised as such) born before the first day of January in the year One thousand nine hundred and ninety five who attain the age of eighteen (18) years and if more than one in equal shares as tenants in common PROVIDED THAT if any such grandchild shall die before attaining an absolute vested interest herein leaving a child or children living on the first day of January in the year One thousand nine hundred and ninety-five such child or children shall stand in the place of such deceased grandchild and take per stirpes and equally between them if more than one the share which the deceased grandchild would have taken if he or she had attained a vested interest in the capital and income hereinbefore referred to." 2 The descendants of the first plaintiff and the settlor are as follows. They had the three children named in clause 1(a). David Robert Denison in 1983 married Annabelle Morris and they had three natural children, Poppie Kate Denison born 11 May 1985, Thea Elizabeth Denison born 18 January 1987 and Nicholas Jack Denison born 3 August 1989 (who are the third, fourth and fifth defendants respectively). Peter Robert Denison ("Peter") on 8 June 1984 married Sandra Brown. They have no natural children. On 23 October 1987 they adopted two children, Darcy Leigh Denison born 15 December 1980 and Kent Preston Denison born 27 March 1982 (who are the first and second defendants respectively). Mary Jane Denison relevantly married in 1993 Gregory Warren Furney. They have had three natural children, Tristan Gregory Furney born 4th April 1993 (who is the sixth defendant), Emily Jane Furney born 14 November 1994 but died aged three months and Anthony Robert Furney born 7 May 1996. Of the seven living grandchildren the last born, Anthony Robert Furney, is excluded from the benefit of the settlement by reason that he was born after 1 January 1995. There remain six grandchildren who benefit from the gift, subject to the question of whether Darcy Leigh Denison and Kent Preston Denison are excluded by reason of their having become grandchildren by adoption. Richard John William D'Apice has been joined as a seventh defendant appointed to represent the interests of (a) yet to be adopted children of the existing children of the settlor and (b) children whether natural or adopted of the settlor. 3 By their amended summons the plaintiffs pray for the following: "3 A determination as to whether the first and second defendants fall within the class of beneficiaries set out in sub-clause 1(a) of the said Deed of Settlement made 14 May 1974. 4 A determination, upon the true construction of the said Deed of Settlement made 14 May 1974 and in the events which have happened, of: (a) whether the class of beneficiaries under sub-clause 1(a) has closed and, in any event, a determination of when it closed or will close; and (b) whether the first and second plaintiff may make a distribution of the share of a beneficiary under the Trust as set out in sub-clause 1(a) to a beneficiary who has attained the age of 18 years." 4 Thus there are three questions raised for the Court's determination:

(1) Do the words "grandchildren" and "grandchild" in clause 1(a) of the deed include adopted children?

(2) Has the class of grandchildren in clause 1 (a) closed?

(3) Can the trustees make a distribution of a share to a grandchild who has attained the age of 18? Question (1): Does the word "grandchildren" include adopted children? 5 The background facts are scant. The settlor did not at the time of the execution of the deed have any adopted grandchildren (or any grandchildren at all). The first defendant and the second defendant are natural children of Peter's wife and Gary L Moulton. They were adopted by Peter by order of the Superior Court of Pike County in the State of Georgia in the USA made on 23 October 1987. Their records of birth in the Commonwealth of Massachusetts have been amended (as is the practice in New South Wales) to show Peter as their father. The settlor has deposed that she did not at the time of making the deed turn her mind to the question of whether she might have adopted grandchildren or whether the gift should apply to them. 6 The following were provisions of the Adoption of Children Act 1965 ("the ACA") as it stood at the time the deed was made: "5(5) In relation to: (a) a disposition of property by will or otherwise by a person who, or by persons any of whom, died before the commencement of this Act, or (b) a devolution of property upon the intestacy of any person who died before the commencement of this Act, an adoption order referred to in subsection (4) has the same effect as if the former Acts had continued in operation. …… 35(1) For the purposes of the laws of New South Wales, but subject to this Act and to the provisions of any law of New South Wales that expressly distinguishes in any way between adopted children and children other than adopted children, upon the making of an adoption order: (a) the adopted child becomes a child of the adopter or adopters, and the adopter or adopters become the parent or parents of the child, as if the child had been born to the adopter or adopters in lawful wedlock, (b) the adopted child ceases to be a child of any person who was a parent (whether natural or adoptive) of the child before the making of the adoption order, and any such person ceases to be a parent of the child, (c) the relationship to one another of all persons (including the adopted child and an adoptive parent or former parent of the adopted child) shall be determined on the basis of the foregoing provisions of this subsection so far as they are relevant, …… (2) The provisions of subsection (1) do not have effect so as to deprive an adopted child of any vested or contingent proprietary right acquired by the child before the making of the adoption order. …… 36(1) Subject to subsection (2) of section 35, the provisions of subsection (1) of that section have effect in relation to a disposition of property, whether by will or otherwise, and whether made before or after the commencement of this Act, and to a devolution of property in respect of which a person dies intestate after the commencement of this Act, except that: (a) those provisions do not affect a disposition of property by a person who, or by persons any of whom, died before the commencement of this Act, and (b) those provisions do not affect a disposition of property that has taken effect in possession before the commencement of this Act.

(2) The provisions of subsection (1) of section 35 do not apply in relation to an agreement or instrument (not being a disposition of property ) made or executed before the commencement of this Act.

(3) Where: (a) before the commencement of this Act, a person made, by an instrument other than a will, a disposition of property, (b) the disposition had not taken effect in possession before the commencement of this Act, and (c) it did not appear from the instrument that it was the intention of that person to include adopted children as objects of the disposition, that person may, notwithstanding that the instrument could not, apart from this subsection, be revoked or varied, by a like instrument, vary the first-mentioned instrument to exclude adopted children (whether adopted under this Act or otherwise) from participation in any right, benefit or privilege under the instrument.

(4) In relation to a disposition of property by a person who, or by persons any of whom, died before the commencement of this Act, and in relation to a devolution of property in respect of which a person died intestate before that commencement, an adoption order made under this Act has the same effect as if the former Acts had continued in force and the adoption order had been made under those Acts.

(5) Nothing in section 35 or in this section affects the operation of any provision in a will or other instrument (whether made or coming into operation before or after the commencement of this Act) distinguishing between adopted children and children other than adopted children. …… 46(1) For the purposes of the laws of New South Wales, the adoption of a person (whether before or after the commencement of this Act) in a country outside the Commonwealth and the Territories of the Commonwealth, being an adoption to which this section applies, has, so long as it has not been rescinded under the law of that country, the same effect as if it were an order for adoption under this Act or the former Acts, as the case may be, made in New South Wales on the date on which it was effected and has no other effect." 7 In approaching the construction of the subject instrument, it is useful to turn to some axioms of documentary interpretation. In Chapter 3, General Rules of Interpretation, of the ageing but classic Odgers' Construction of Deeds and Statutes (5th Ed, 1967) it is stated (at 27): "... the court is faced with the question -- what does the deed mean? It must be noticed that this is not necessarily the same as 'what did the parties intend when they executed the document?' They are presumed to have intended to say that which they have in fact said, so their words as they stand must be construed. The question is, not what did the parties intend to say -- that is precluded by the presumption that they have said what they intended to say. The question to be solved is, what have they said? What meaning is to be attached to the expressions they have used?"

The chapter proceeds to set out basic rules of interpretation, as, Rule I The meaning of the document or of a particular part of it is therefore to be sought for in the document itself; Rule II The intention may prevail over the words used; and Rule III Words are to be taken in their literal meaning. In this last regard it is stated (at 37-38) that this is not necessarily the etymological or dictionary sense, "but the sense in which the words are used by the majority of people -- the popular sense." 8 The application of this last proposition is illustrated in the judgment of Kirby P (as his Honour then was) in Harris v Ashdown (1985) 3 NSWLR 193 at 199 - 200. His Honour, in a case where the question was whether "children" and "grandchildren" in a will included a child adopted by a daughter of the testator after his death, referred to the dictum of Lord Cairns in Hill v Crook (1873) LR 6 HL 265 at 282 - 283, to the effect that "children" prima facie referred to legitimate children and excluded illegitimate children, and said at 199 - 200: "Attitudes to personal relationships and the provisions of the law on matters such as illegitimacy and adoption, have changed so significantly in the past hundred years, that it is no longer safe to adopt, even as a rule of thumb, the principle that by the use of the word 'child' in his will, a testator must be taken to mean only a legitimate child. Quite apart from the provisions of legislation on adoption and the status of illegitimacy, social attitudes to such children have so changed since the 19th century, as to make the rule laid down by Lord Cairns inapplicable to modern conditions. In 1873, adoption (other than by Act of Parliament in the case of Royal adoptions) was virtually unknown as a legal status. It was not known in the law of this Statute under 1923 [sic]. Attitudes to illegitimacy were quite different to those which exist nowadays, and are now reinforced by legislation. In 1873, if a testator referred to a 'child' or 'children' in a will, he did so against the background of legal provisions and social attitudes and prejudices which existed at that time. A testator writing a will today does so against a quite different background of legal provisions and social attitudes. Reference has been made in recent decisions of the Court to the changing attitudes to de facto married relationships and their significance for legal principles laid down in earlier times: see Baumgartner v Baumgartner (1985) 2 NSWLR 406; A A Tegel Pty Ltd v Madden (1985) 2 NSWLR 591. The application to a modern will of the approach proposed by Lord Cairns in 1873 would, in the changing circumstances of personal relationships today, run the very real risk of frustrating the testator's intention. Accordingly, in my view it is no longer safe to approach the construction of words such as 'child' and 'children' from the starting point of Lord Cairns' dictum. Nowadays, it would be much safer to include in the expression 'child', as used in a will, legitimate and ex-nuptial, adopted and step-children, unless, from the language of the will itself, or from admissible surrounding circumstances, it is shown that a narrower meaning was intended by the testator. Such an approach acknowledges at once the changing nature of personal obligations in today's society and the demise of earlier prejudices against illegitimacy which help to explain the starting point taken by Lord Cairns and, consequently, those who have since followed his dictum. That starting point may well have been appropriate in the social circumstances in which wills were written in 1873. It is scarcely appropriate in modern Australia."

It must be remembered that that was decided under an earlier statutory framework than now exists. Although the ACA was in force at the time of the decision, it did not apply because both the will (1948) and the death of the testator (1950) preceded its commencement. The case turned on the intention of the testator. The Court of Appeal decided (Kirby P and McHugh JA, Priestley JA dissenting) that the word "grandchildren" in that will included adopted children. The majority did this by reference to the document and the testator's personal circumstances 9 Times moved on between 1948 when the will in Harris v Ashdown was made and 1974 when the settlement in this case was made. If this case fell to be decided by the discernment of the settlor's intention, the inference that I should draw from the document and the surrounding circumstances is that it was the settlor's intention that "grandchildren" should include adopted children. By 1974 the continuing shift in social attitudes made it more likely that a reference to children in ordinary language would include adopted children. There is nothing in evidence about the settlor which would suggest that she had a different usage. Furthermore, the contrary conclusion would lead to the curious result that persons born before 1 January 1995 who became grandchildren by adoption after that date could take, whereas persons who became grandchildren by birth after 1 January 1995 could not. Only two additional comments need be made. First, the evidence of the settlor as to whether or not she turned her mind to the possibility of adoption was admitted because not objected to; it was not admissible and, even though admitted, in accordance with the law stated in the passage from Odgers set out above, should not be used and has not been used in the interpretation of the document. Secondly, the only indication in the document pointed to as suggesting that the intention was to exclude adopted children was the specific reference to children "legitimate or illegitimate". This was said to indicate that in the settlor's dictionary "children" referred only to natural, legitimate children. I do not think that this is so. The legal change in the status of illegitimate children came only with the Children (Equality of Status) Act 1976 (now replaced by Status of Children Act 1996). The absence of this reform may have suggested the desirability of specificity about illegitimate children in a 1974 document. Whether that be so or not, I do not take the specific reference to illegitimate children to be sufficient to lead to the conclusion that adopted children were not meant to be included in the expression "grandchildren" in the deed. 10 However, the primary basis on which I decide this question is simpler than that. It is acknowledged by all parties that the adoptions of the first and second defendants are adoptions to which s 46 of the ACA applies. Since the deed does not fall within either of the exceptions in s 36(1), the combined effect of that subsection and s 35(1)(a) is that the adopted children are children for the purposes of the instrument. The provision would be excluded from the operation of the statute only if it could be characterised as a provision "distinguishing between adopted children and children other than adopted children" within the meaning of s 36(5). I have already at [9] expressed the view that it could not be concluded from the terms of the deed that the settlor did not intend to include adopted children among the children referred to. A fortiori the relevant provision of the deed could not be taken to distinguish between adopted and other children. That the operation of the ACA is as I have stated was acknowledged by Helsham J in Re Fogg (Dec'd); Mordue v Mordue [1972] 1 NSWLR 417 at 418 - 419 where his Honour said that the provisions of that Act would have brought the relevant children within the gift, although the opposite conclusion was reached on the formerly applicable principles, the testator in that case having died before the commencement of the ACA. 11 Question 1 will therefore be answered, Yes. Question (2): Has the class of grandchildren closed? 12 A useful commencing point for the consideration of the class closing rules is the report of Andrews v Partington (1791) 3 Bro CC; 29 ER 610. The locus classicus concerning the rules in Australia is in Crane v Crane (1949) 80 CLR 327, where Dixon J said at 335 - 337: "The case is governed by the well-known rule of construction or of convenience, relating to the ascertainment of the objects of a postponed class gift. If a fund is bequeathed to a class so that when each member attains a specified age or fulfils some other condition attached to the gift he is enabled to call for his share, only those may take who are in existence when the first member reaches that age or fulfils the prescribed condition and those who come into existence afterwards are excluded. The class is then closed and although the numbers who ultimately share may be diminished by reason of the failure of one or more of them to attain full age or comply with some other condition on which the title to participate may be contingent, the numbers cannot be enlarged by the birth of additional persons who if born earlier would have been eligible for membership of the class. The rule applies alike to limitations which merely postpone payment until attainment of the specified age or fulfilment of the given condition and to limitations which make vesting contingent thereon.

The purpose of the rule is to enable those members of a class who have qualified so that they have an interest vested in possession to enter at once into enjoyment of their shares. This could not be done if the class were kept open so long as it were possible that other children might be born and become members. As long as the parent lived the class might be increased by the birth of further children and the share of existing children diminished accordingly. As the share would thus be unascertainable and the minimum amount even could not be fixed no payment could be made, until the parent died, to those whose interests were otherwise vested in possession. To avoid this consequence a construction is given to such bequests which will make further accession to the class impossible once the conditions have been satisfied giving any child a share vested in possession. Until this event children are let in and by their number the minimum share is fixed which each will take. But, by the death of any of them before qualifying for a vested interest by attaining the given age or satisfying the conditions attached to the gift, the size of the proportionate share may afterwards be enlarged. 'The rule of the court has gone upon an anxiety to provide for as many children as possible with convenience. Therefore any coming in esse before a determinate share becomes distributable to anyone is included' (per Lord Eldon, Barrington v Tristram (1801) 6 Ves 345, at p 348 (31 ER 1085, at p 1087)). It would be highly inconvenient if there were no such principle of construction and the shares of children were left unascertainable throughout the whole life of their parent because of the possibility of accession to the class by future births. It is a rule of convenience. But, it has been repeatedly pointed out, the rule resolves an inconsistency of intention disclosed by the testator's dispositions. He intends that every child who attains the given age shall have his share but he intends that he shall have it before, on the literal words of the limitation, it is possible to ascertain the objects who fall within the class …. But the rule cannot be applied if the will expresses an intention which is inconsistent with the idea of the first child who satisfies the conditions attached to the gift calling for his share. Such an inconsistent intention may be found in a provision postponing the distribution of any share until, for example, the youngest child for the time being attains twenty-one. It has been found in maintenance or advancement clauses framed in such a way as to show that the fund was to be kept together notwithstanding that the share or shares of a member or members of the class had vested in possession and maintenance or advancement was to be allowed thereout beyond that period (Bateman v Gray (1868) LR 6 Eq 215; Re Courtenay (1905) 74 LJ (Ch) 654) (at p337)" 13 The answer to Question 2 flows easily from the above principles. The rules apply to close the class upon the first of its members becoming entitled to call for his or her share, unless the instrument evinces a contrary intention. I can find nothing in this instrument which does so. Mr Davies, of Senior Counsel for the seventh defendant, submitted that the limitation to grandchildren born before 1 January 1995 evinced a contrary intention and cited In re Tom's Settlement; Rose v Evans [1987] 1 WLR 1021. But in that case (where the general nature of the disposition was similar to the present) the settlor had specified a "closing date", which Browne-Wilkinson V-C found evinced a contrary intention. There is nothing similar here; the limitation of the gift to those born before 1 January 1995 is to ensure compliance with the rule against perpetuities. Also cited was In re Stephens. Kilby v Betts [1904] 1 Ch 322, where the class was held to remain open beyond the first vesting because the testator directed accumulation of income for a specified period. The deed here only empowers, but does not direct accumulation. The answer to Question 2 is, Yes. As no grandchild attained the age of 18 years before 1 January 1995, the class closed on that day. Question 3: May the shares of grandchildren who have attained 18 be distributed? 14 The answer is, Yes. As the class has closed, the minimum share of the beneficiaries whose interest has vested may be distributed. Conclusion 15 I shall make orders in accordance with the above answers to the questions set out in [4]. …oOo…

Last Modified: 02/27/2001 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.