Fairbairn v Varvaressos & Ors

LEGISLATION CITED : Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW)

• Astor, In re; Astor v Astor [1922] 1 Ch 364 - Boraston's Case (1587) 3 Co Rep 16a [76 ER 664] - Duffield v Duffield (1829) 1 Dow & Cl 268 (6 ER 525) - Fell v Fell (1922) 31 CLR 268 CASES CITED : - Hammersley v Newton (2005) 30 WAR 568 - Hickling v Fair [1899] AC 15 - Lainson v Lainson (1854) 5 De GM & G 754, at 776 per Turner LJ [43 ER at 1063] - Langston v Langston (1834) 2 Cl & Fin 194, at 243 [6 ER 1128 - Phipps v Ackers (1842) 8 ER 539 - Tompkins v Simmons (1931) 44 CLR 546

TEXTS CITED : Jarman on Wills (8th Ed) p 1420

Joanna Marie Fairbairn (Plaintiff) PARTIES : George and Yvette Varvaressos (First Defendants) Kyriakoola Varvaressos (Second Defendant)

COUNSEL : M.K. Meek, G.E. Doherty (Second Defendant)

1 The Plaintiff is one of eight children of the late George Varvaressos, who died on 17April 1961, leaving a will dated 1 April 1960. Probate of the will was granted to two sons of the deceased, Stephen and Demetrius. 2 For the sake of convenient reference, and without intending disrespect, I will refer to members of the family by their first names. 3 When the deceased died he owned a property in Bellevue Hill, then valued at £11,000. His will gave a half share of the property to one of his daughters, Kyriakoola ("Kitty"), for life and then a gift over, upon terms in the will which give rise to these proceedings. 4 The Bellevue Hill property was sold by the executors in 1970 and, in accordance with the provisions of the will, half of the proceeds of sale were applied to the purchase of a home unit at Rose Bay in which Kitty resided. She continues to reside there. 5 The title to the home unit was originally in the names of the executors alone. In 1985, they transferred a one-third interest in the unit to Kitty absolutely. It is said that the transfer was made in recognition of the fact that one-third of the purchase price of the unit was, directly or indirectly, provided by Kitty out of her own monies. 6 The Plaintiff ("Joanna") is one of the deceased's children. She commenced these proceedings in 1995. She made three claims:

• for further provision out of the deceased's estate under the Testator's Family Maintenance and Guardianship of Infants Act 1916 (NSW) and for an extension of time to bring that claim;

• for a declaration that the Rose Bay unit is held by the executors upon the trusts of Clause 5(a)(i) of the will, to the effect that on the death of Kitty as life tenant, Joanna as a residuary beneficiary is entitled to a share of the property;

• a declaration that the transfer of a one-third interest in the Rose Bay unit to Kitty absolutely in 1985 was made by the executors in breach of trust, and for consequential orders. 7 Both executors of the estate, Stephen and Demetrius, had died before the commencement of the proceedings, Stephen in 1983 and Demetrius in 1988. The executors of Demetrius' estate, George and Yvette Varvaressos, were therefore joined as Defendants in the proceedings. That was the only joinder necessary as, by Stephen's prior death, Demetrius, as at his death, was sole executor of his father's estate. Kitty has been joined as a Second Defendant in the proceedings. She is the only active Defendant. 8 On 2 April 2008, forty-six years after the deceased died, Macready AsJ dismissed for want of prosecution Joanna's claims under the Testator's Family Maintenance and Guardianship of Infants Act and for breach of trust by reason of the transfer of a one-third interest in the Rose Bay unit to Kitty. His Honour left on foot the claim for a declaration of trust in respect of the remaining two-thirds interest in the property. That is the issue with which I am now dealing. 9 Joanna contends that, on the true construction of the will, when Kitty dies without children - Kitty is now eighty-three and has no children - the Rose Bay unit will be held upon the trusts of the residuary bequests in the will. Joanna is a residuary beneficiary. 10 Kitty, no doubt in the interests of other members of the family, contends that on the true construction of the will, when she dies the Rose Bay unit passes to the estates of Demetrius and of Arhondoula, known as Iris, another child of the deceased. 11 Joanna's surviving claim for relief, as formulated in her Further Amended Summons filed on 19 June 1998, is not apt to raise the question which is really in contest between the parties. Paragraph 3 of the Further Amended Summons seeks: "Declarations that:-

(1) On the sale of the property at … Bellevue Hill, being part of the Estate of George Varvaressos, the executors of the estate, Stephen George Varvaressos and Demetrius Varvaressos, held one half of the net proceeds on the trusts contained in clause 5 of the will of George Varvaressos.

(2) Stephen George Varvaressos and Demetrius Varvaressos applied that half of the net proceeds of the sale of the property at … Bellevue Hill or some part of it, to the purchaser of two strata title lots, namely, Lot 4 and Lot 16 in Strata Plan 3406.

(3) Accordingly:- (A) Stephen George Varvaressos and Demetrius Varvaressos, until the former's death on 17th August 1983; and (B) Demetrius Varvaressos thereafter

held the two strata title lots on the trusts contained in clause 5 of the will of George Varvaressos.

(4) Demetrius Varvaressos transferred an undivided one-third share as tenant in common in each of the two strata title lots to the second defendant, Kyriakoola Varvaressos, in breach of the trusts contained in clause 5 of the will of George Varvaressos.

(A) Demetrius Varvaressos and the second defendant, until the former's death and

(B) the first defendants, as executors of the estate of Demetrius Varvaressos and the second defendant thereafter hold

the two strata title lots on the trusts contained in Clause 5 of the will of George Varvaressos." 12 There is no issue as to sub-paragraphs (i) and (ii) of the relief sought. The real question, which is not elucidated in sub-paragraph (iii), is: upon which of the trusts contained in Clause 5 of the will is a two-thirds interest in the property to be held after Kitty's death. 13 Although the real issue is not formulated in the Further Amended Summons, it is plainly the issue which the parties wish, and need, to have determined. I will proceed on that basis. 14 I do so with the express consent of Mr Meek of Counsel, who appears with Mr G. Doherty of Counsel, for Kitty but without the express consent of Joanna. Joanna has previously appeared in person in these proceedings. She has not appeared on the hearing of this issue. For reasons which I have given in a separate judgment I have determined that it is in the interests of justice to proceed with the hearing in her absence. Essentially, the question which is to be decided is the construction of the will in the light of a very few facts which are not in dispute. As this litigation has continued for fourteen years, the Court should determine all the remaining issues as soon as possible. 15 It is now convenient to set out the relevant terms of the will and the facts. 16 After appointing the executors and giving small pecuniary legacies, the will continues: " I GIVE DEVISE AND BEQUEATH my house property and land situate at … Bellevue Hill aforesaid together with the whole of the furniture and chattels in or about or used in connection with the said house property to my Trustees to hold the same upon the following trusts that is to say:-

(a) To permit my dear daughter KYRIAKOOLA (otherwise known as Kitty) VARVARESSOS to have the use and benefit of the said house property furniture and chattels during her life for so long as she makes the said house property her principal place of residence … PROVIDED THAT if my Trustees with the consent of the said Kyriakoola Varvaressos shall at any time during the life of the said Kyriakoola Varvaressos sell the said house property furniture and chattels then and in that event I DIRECT my Trustees to divide the nett proceeds of such sale into two (2) equal shares and to hold such equal shares upon the following trusts respectively that is to say:-

(i) To pay the income from one (1) of such equal shares to the said Kyriakoola Varvaressos during her life and after her death to hold as well the capital as the income thereof UPON TRUST for such child or children of the said Kyriakoola Varvaressos as shall be living at the date of her death and shall attain the age of twentyone (21) years and if more than one in equal shares as tenants in common but if the said Kyriakoola Varvaressos shall die without leaving issue her surviving then and in that event UPON TRUST for the said Demetrius Varvaressos and my dear daughter ARHONDOULA (otherwise known as Iris) CAREDES in equal shares as tenants in common.

(ii) To pay the other equal share to the said Demetrius Varvaressos and the said Arhondoula Caredes in equal shares." 17 By Clause 6, the deceased gave his real estate and chattels located in Greece to such of his children as survived him. By Clause 7, he gave the residue of his property in Greece for charitable purposes. 18 Clause 8 provides: " I GIVE DEVISE AND BEQUEATH all my real and personal property of whatsoever nature or kind and wheresoever situate which is not otherwise disposed of by or under the authority of this my Will or in due course of administration of my Estate unto my Trustees … upon the following trusts that is to say:-

(a) as to one equal one-quarter part thereof UPON TRUST for my said daughter ARHONDOULA CAREDES absolutely;

(b) as to one equal one-quarter part thereof UPON TRUST for my said son DEMETRIUS VARVARESSOS absolutely;

(c) as to one equal one-quarter part thereof UPON TRUST for my said daughter KYRIAKOOLA VARVARESSOS for her life and after her death for such child or children of the said Kyriakoola Varvaressos as shall be living at the date of her death and shall attain the age of twentyone (21) years and if more than one in equal shares as tenants in common or if the said Kyriakoola Varvaressos shall die without leaving issue her surviving who shall attain or have attained the age of twentyone (21) years then and in that event UPON TUST for the said ARHONDOULA CAREDES and DEMETRIUS VARVARESSOS in equal shares as tenants in common; and

(d) as to the remaining equal one-quarter part thereof UPON TRUST for my dear daughter IOANNA (otherwise known as Joan) ROBERTS for her life and after her death for such child or children of the said Ioanna Roberts as shall be living at the date of her death and shall attain the age of twentyone (21) years and if more than one in equal shares as tenants in common or if the said Ioanna Roberts shall die without leaving issue her surviving who shall attain or have attained the age of twentyone (21) years then and in that even UPON TRUST for the said ARHONDOULA CAREDES and DEMETRIUS VARVARESSOS in equal shares as tenants in common." 19 The relevant facts relating to the beneficiaries concerned in this case are as follows:

• Kitty was born in 1925 and is still living. She has no children;

• Joanna was born in 1927. As at the date of the deceased's death she had no children but she had a daughter, born in 1966, who is still living. 20 Mr Meek submits that, in the light of these facts, and having regard to the thrust of the deceased's intention evidenced in the will as a whole, Clause 5(a)(i) is to be construed as vesting in interest the remainder under the bequest in Demetrius and Iris as from the date of the deceased's death, such interest to be subject to defeasance if Kitty dies leaving at least one child who attains the age of twenty-one. 21 If this construction is correct, then the gift over to Demetrius and Iris will not fail by reason of their deaths prior to termination of the life estate because their interests vested before they died. In the events which have happened (and which are likely to happen given Kitty's age) when Kitty dies, the interests vested in interest in Demetrius and Iris during their lifetime will then mature into interests vested in possession, and will form part of the estates of Demetrius and Iris. 22 There has been no contradictor in the case but the opposing construction of the will is plain enough. It is that, by force of the words in Clause 5(a)(i) "then and that event" , Demetrius and Iris are not to have any interest in the remainder at all unless and, most importantly, until Kitty dies and it is ascertained that she has left no children surviving her. If that construction is accepted, then the gift over to Demetrius and Iris fails, because they are not alive at the time that the gift over takes effect. In that circumstance, there would be a failure of the devise of the remainder and it would fall into residue, so that Joanna would have a quarter interest in it under Clause 8(b). 23 Despite the absence of a contradictor, I have given careful consideration to both Mr Meek's construction of the will and to the opposing construction. I have come to the conclusion that Mr Meek's construction is correct, for the following reasons, which may be quite briefly stated. 24 Because there were no children of Kitty either at the date of the will or as at the date of the testator's death, the devise of the remainder to the class of her surviving children could, by its very nature, have been only a contingent remainder. As at the deceased's death there was no one in existence who could say "I must take the remainder even if subject to defeasance": see e.g. Jarman on Wills (8th Ed) p 1420; In re Astor; Astor v Astor [1922] 1 Ch 364, at 371-2, 380, 385. 25 If the will is construed so as to vest no interest in the remainder in Demetrius and Iris unless and until Kitty dies without children, then the risk of the remainder to Demetrius and Iris failing must be, and must have been seen by the deceased to have been, high. Demetrius and Iris were both considerably older than Kitty. 26 It is often said that the Court is in favour of early vesting and leans against a construction of a will which will produce an intestacy, even a partial intestacy, if the words of the will permit a construction which makes a devise effective: see Duffield v Duffield (1829) 1 Dow & Cl 268 [6 ER 525]; Langston v Langston (1834) 2 Cl & Fin 194, at 243 [6 ER 1128, at 1147]; Fell v Fell (1922) 31 CLR 268. 27 In the present case, the words in Clause 5(a)(i) "then and in that event upon trust for … Demetrius and … Iris" may be construed, not as limiting the time at which the remainder will vest in interest but, rather, the time when it will vest in possession. This is a common construction of such, and similar, words: see e.g. per Dixon J in Tompkins v Simmons (1931) 44 CLR 546, at 558-9; Lainson v Lainson (1854) 5 De GM & G 754, at 776 per Turner LJ [43 ER at 1063]. 28 Another aspect of this principle of construction is illustrated in Phipps v Ackers (1842) 8 ER 539 in which it was held that where a testamentary gift is expressed to come into possession on the termination or failure of a prior interest, this is not generally regarded as a condition precedent to vesting in interest. 29 It is well established that where there is any doubt about when a devise shall vest, there is a presumption that the testator intended the gift to be vested, subject to being divested, rather than it should remain in suspense: see Hickling v Fair [1899] AC 15, at 27; Hammersley v Newton (2005) 30 WAR 568, at 588. 30 An application of this principle is the rule in Boraston's Case (1587) 3 Co Rep 16a [76 ER 664], which is to the effect that a future estate may be construed to be presently vested in interest so as to vest in possession immediately on the determination of the prior estate, even though that future estate is dependent upon a contingent event. 31 In my opinion, the rule in Boraston's Case applies aptly in this case to produce the following result. The remainder to Demetrius and Iris is dependent upon a contingency, that is, that Kitty dies without children. The remainder vests in interest in them during the pendency of that contingency, i.e., during Kitty's life. If the contingency is fulfilled, their interest in the remainder is defeated. If the contingency is not fulfilled, their interest in the remainder becomes vested in possession immediately on Kitty's death. Thus is a possible failure of the devise avoided. 32 This result is, I think, also in accordance with the testator's intentions as deduced from the will as a whole. By Clause 5(a)(ii) he gave the half share in the Bellevue Hill property not disposed of by the previous paragraph to Demetrius and Iris absolutely. I infer from Clause 5 as a whole that his intention was that the Bellevue Hill property should go for the benefit of Demetrius and Iris, subject to the benefit which he wished to confer on Kitty and on her children, if she had any. 33 In the result, I conclude that Demetrius and Iris, during their lifetime, acquired an interest in the remainder under Clause 5(a)(i) which was vested in interest and was subject to defeasance if Kitty died leaving children who attained twenty-one years. When Kitty dies without leaving children, the remainder vests in possession in the estates of Demetrius and Iris. It follows that, the remainder not falling into residue, Joanna has no interest in it, present, future or contingent. 34 In those circumstances, even if it was still open to agitate further the issue of the executors' alleged breach of trust in transferring a one-third interest to Kitty in 1985 despite the judgment of Macready AsJ on 2 April 2008, Joanna has no interest under the will in the result of such a contest and, therefore, has no standing to maintain such a claim. 35 Accordingly, the Plaintiff's Further Amended Summons is dismissed. - oOo -

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