Kenna v Conolly
104 A case showing the working through of the proposition that the interests of Demetrius and Iris were still contingent at the times of their deaths is Kenna v Conolly (1938) 60 CLR 583. It concerned a will that gave the entirety of the testator's estate on trusts that benefited his children and their issue. A codicil provided:
"… in the case of death and failure of issue of my said children ... all the residue and remainder of my real and personal estate ... shall be equally divided amongst the children of my brother [K] and of my sister [C] and the issue (if any) of such children of my said ... brother and sister who shall be dead provided nevertheless that the issue of any deceased child of my said ... brother and sister shall have no more than the share to which the deceased child or respective deceased children would have been entitled to if living per stirpes and not per capita."
105 The testator's children who survived him died without leaving issue. The last of the testator's children died in 1934. Four children of the testator's brother K survived the testator, but one of those died, childless, before 1934. The testator's sister C had five children who survived the testator, but four of them died without issue before 1934. The fifth also died before 1934, but left four children, who were still alive at the time of the action. At first instance in the Supreme Court of New South Wales, Nicholas J held (at 585) that on the true construction of the codicil:
"… in the case of the death and failure of issue of his children such of the children of [K] and [C] as survived the testator took vested interests in equal shares per capita and not per stirpes in that residuary real and personal estate, the interest of each of such children being liable to be divested in the event of the death of that child before the date of distribution of such residuary real and personal estate (that is to say, before the date of the death and failure of issue of the testator's last surviving child) leaving issue and not otherwise …".
106 An appeal from that decision was dismissed unanimously by the High Court. Importantly for the present case, a majority disapproved the analysis that Nicholas J had given of when the interests of the children of K and C became vested. However, their disapproval of the analysis did not lead them to conclude that the practical outcome of the real matter in issue - namely, who was entitled to the property in dispute, in the events that had happened - was in any way different from the practical outcome to that question at which Nicholas J had arrived. Rich J, at 588, said:
"There is here no vested gift liable to be divested upon a particular contingency, but everything remained in contingency until the death of the testator's last surviving child without issue."
107 However, Rich J held at 589 that for the purpose of identification of the class who would take in the event of that contingency arising, there was no contingency requiring a child of K or C to survive until the time of the death of the testator's last surviving child without issue. He said, at 589:
"Every member existing at the death of the testator or coming into existence after his death and before the ultimate failure of his issue is qualified to take without any further event personal to himself occurring and without any further event except the failure of the preceding gifts by the death without issue of the testator's surviving child. In this condition of the title of those members of the class who are nephews and nieces it does not seem to me to matter whether the provision for the inclusion of the children of those dying leaving issue is regarded as divesting or as defeating the prima facie title of the parents so dying. In effect it states specifically that the issue of children of persons who otherwise were members of the class should on their death leaving issue take the parents' place in the class. Such a provision should be confined to the specific event which it describes and should not be made the basis of an implication that survival to the period of distribution is a necessary qualification of members of the class in all events.
108 Starke J was the only judge who made no express or implicit criticism of the analysis of Nicholas J. He concluded, at 591:
"The result is that all the children of the testator's brother and sister, [K] and [C], who survived the testator take a share unless they died leaving issue before the testator's last surviving child, in which case the issue of such child or children take the parent's share."
109 Dixon J gave the fullest analysis. At 594 he said, concerning the declaration that Nicholas J had made:
"It will be noticed that under this declaration the children of [K] and [C] who survive the testator are treated as taking a share which vests in interest before it vests in possession. But actually the limitations to those children remain contingent up to the death without issue of the last surviving child of the testator when they vest in possession. It is true that their survival of the death without issue of the testator's last surviving child is not among the contingencies which the limitation expressly states. But the whole limitation over is expressed to be contingent on the death without leaving issue of all four of the testator's children. Until the death without issue of the last surviving child, the gift over remained contingent. For 'a possibility of issue is always supposed to exist in law, unless extinguished by the death of the parties; even though the donees be each of them an hundred years old' (Blackstone's Commentaries, vol. II., p. 125). And at the death of the testator leaving all four children him surviving the contingencies were numerous and the likelihood of them occurring was apparently remote. As the gift over must vest alike in interest and in possession on and not before the death without issue of the last surviving child of the testator, there could be no actual vesting and divesting of any of the future interests created by the limitation of residue."
110 Dixon J went on at 594-5 to consider what the situation would have been if the gift had taken the form of a remainder granted subject to a prior estate that took effect in possession but determined (a result that could arise either by the prior estate coming to its natural end, or coming to an end through an event such as forfeiture or surrender):
"If the limitation of residue to the testator's nephews and nieces, being children of his sister [C] or of his brother [K], had been absolute and subject only to prior life interests so as to amount to remainders or other future interests expectant only upon the determination of the precedent estate or interest in possession. I should have thought the established rules of construction would have produced the result stated in the decree. The prima facie rule is that a devise or bequest to the children of a named person to take effect absolutely upon the determination of a prior life estate whether given to that person or some other person confers an interest upon every such child who is in existence at the death of the testator or comes into existence after his death and before the determination of the life estate. The quantum of the interest may be diminished as additional members of the class come into existence, but otherwise the interest is vested. …
The presumption is in favour of early vesting; the contingency of survival to the period of distribution or enjoyment is not imported into the description of the class and an interest once vesting is not made the subject of a divesting condition except by express words or clear implication. Such considerations combine to produce the result."
111 He then turned, at 596-7, to consider "whether the contingencies upon which the residuary gift depends makes inapplicable what otherwise would be the prima facie construction." He concluded that they did not. In the course of so doing, he said, at 597:
"In Wagstaff v Crosby (1846) 2 Coll 746; 63 ER 943 the testator made a gift to three named nephews and a niece contingently upon his daughter dying without children. The gift was to the nephews and niece and the survivors or survivor of them and they all predeceased the daughter. Knight Bruce VC did not accede to the argument that as everything remained in contingency until the death of the daughter without issue only those in esse at that time took, and he held that as all four were survived by the daughter their representatives were entitled.
The important consideration is not that the interest is vested but that it exists as a transmissible interest liable to be defeated in the contingency expressed and, unless an implication is made, not otherwise. The decision of Knight Bruce VC was explained on this ground by Lord Hatherley when Vice-Chancellor in In re Sanders' Trusts (1866) LR 1 Eq 675, p 684. He said: 'The court sees an intention to give, in one event in one direction, and in another event in another; and what difference can it make whether you call these vested interests defeasible in a certain event, or contingent and transmissible interests, except perhaps this, that the court is less disposed to divest a vested estate than to say the estate does not vest until the event occurs one way or the other?'
Although the contingency thus lessens the weight of the considerations against defeating the transmissible interests, the presumptive construction has been applied to limitations very like the present arising upon a contingency ( Baldwin v Rogers (1853) 3 DeG M & G 649; 43 ER 255)."
112 I interpolate that Wagstaff v Crosby had a factual situation indistinguishable from that of the present case, in that the gift over on the failure of the primary donee to have children is to the secondary donees as named individuals, not as a class. Wagstaff v Crosby was followed, on the point at issue in the present case, in In Re Sanders Trusts (1866) 1 Eq 675 at 683-684.
113 In Perpetual Trustee Company (Ltd) v Scheiler at 171 Sugerman J approved a passage from Halsbury's Laws of England 2nd ed vol 34 p 390-391 to the effect that a gift to a class of children when the youngest attained a specified age confers a vested interest on all of them when the youngest attains that age, whether they were living or dead at the time of payment, unless there are other provision in the will from which a contrary inference might be drawn. The approved quotation from Halsbury went on to say:
"In the case of a similar gift to individuals, and not to a class, prima facie they take vested interests although dying before the specified age."
114 Sugerman J continued:
"A similar rule is stated in Theobald on Wills, 10 th edn, p 402. As with Halsbury, it is stated as applicable to class gifts, but if there is any distinction between a class gift and a gift to named persons, it is, I think, that the latter is an a fortiori case."
115 Similarly, the passage from Jarman on Wills p 1342 that I have quoted at [101] refers to the transmissibility of contingent interests as applying equally to interests arising from a class gift, and interests arising from a gift to named individuals.
116 In Kenna v Conolly at 598, Dixon J returned to voice his disapproval of the analysis of Nicholas J:
"Although the decree may not be strictly accurate in its application of the word vested, it declares the rights of the parties in a way which can cause no error."
117 The remaining member of the Court, McTiernan J made no explicit criticism of the form of the declaration of Nicholas J, but his reasons are inconsistent with its strict application. He said, at 598:
"The residuary gift is expressed to depend on a future contingency which is in these terms: 'in case of the death of all my children without leaving issue under the trusts of my will and codicil.' The contingency is one which is irrespective of the nephews and nieces surviving the given period. 'As far as I can discover,' Kay J. said in In re Cresswell; Parkin v Cresswell (1883) 24 Ch D 102 , at p 107, 'the only case in which a contingent future interest is not transmissible is where the being in existence when the contingency happens is an essential part of the description of the person who is to take.' The contingency here is a collateral event, and the observations of that learned judge apply."
118 In the present case, none of the complications of class gifts arise, because the gift to Demetrius and Iris, upon failure of Kitty's issue, was to them as named individuals.
119 I can see no relevant distinction between the structure of the will in Kenna v Conolly, and the structure of the present will. In those circumstances, if it were a matter of any importance, I would follow Kenna v Conolly and hold that the subject matter of the gifts to Demetrius and Iris will not become vested until the death of Kitty without children. That Kenna v Conolly is a High Court decision would be a sufficient reason for taking that course. As well, the careful analytical approach of Dixon J to precisely which rights arose when, is preferable to the result-oriented and policy driven approach of the judges who decided Taylor v Graham. In particular, the reasoning of Lord Gordon, quoted at [64] above, is in terms that assume the answer to the question at issue.
120 However, Kenna v Conolly also provides authority for the irrelevance of precisely when the gift to Demetrius and Iris became, or will become, vested to the real question at issue in these proceedings. Even if the actual subject matter of their gift will not vest in interest until Kitty's death, they were still given a right that the law recognised relating to that subject matter. The will gave it to them immediately on the Deceased's death. One of the contingencies to which the right was subject was satisfied during their lifetimes, but another contingency remained unsatisfied at the time of their respective deaths. That right has now passed to their respective legal personal representatives, and will in due course mature into a vested right in the clause 5(a)(i) fund.
121 Mr Murr submits that the foregoing analysis, dependent on the transmissibility of contingent remainders, is inapplicable. Rather, he submits, the gift to Demetrius and Iris lapsed because "a legacy to a named person at a definite future time lapses if the person dies before that time".
122 Authority for the italicised proposition can be found in Perpetual Trustee Company (Ltd) v Scheiler (1948) 49 SR 169 at 172, Bruce v Charlton (1842) 13 Sim 65 at 68-70; 60 ER 26 at 27-28, Smell v Dee (1707) 2 Salk 415; 91 ER 360, Jarman, op cit p 1388, Fearne, Contingent Remainders and Executory Devises (10th ed London 1844) p 552, and Theobald on Wills, 16th ed par [43-28] p 603. However it is a question of construction whether the gift given to Demetrius and Iris by clause 5(a)(i) is a "legacy" to them "at a definite future time". In my view it is not. First, it is not apt to call it a "legacy" at all - it is a contingent interest in remainder in a specific item of realty. Second, the passage in Fearne at 552 is said, at 553, to be qualified by an exception:
"… where the legacy is ingrafted by way of executory bequest to take effect on a contingent event defeating the first bequest, as when personal estate is bequeathed to A, and if he shall have no child who shall obtain the age of 21 years to B; the interest of B is contingent, as it depends for its vesting in him in possession on the event of A's not having a son who attains 21; but this contingent interest is so far immediately vested in him in the right, as to be transmissible to his personal representatives, the interests of the first and second taker vesting in them at the same time. The consequence is, that, if the second legatee dies while the event defeating the first bequest is in suspense, and that event afterwards happens, the personal representatives of the first taker become entitled to the legacy."
123 The present case is much closer to that exception than to the situation of the legacy payable at a definite future time. Third, it begs the question to say that the rights of Demetrius and Iris arise only "at a definite future time". Rather;