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[2026] NSWSC 1166
Supreme Court of NSW
2026-09-30
Slattery J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Glass v Tsivis [2026] NSWSC 1166
Hearing dates: 27 November 2025
Date of orders: 30 September 2026
Decision date: 30 September 2026
Jurisdiction: Equity
Before: Slattery J
Decision: Declaration made that since the deceased’s death the Second Cross-Claimant has been and will be entitled during his lifetime to a beneficial interest in the whole of the share capital of the testator’s private company, and that on the death of the Second Cross-Claimant the Sequoyah shares will form part of the residue of the deceased’s estate. Orders made for the plaintiff’s costs to be paid out of the estate of the deceased. Directions made to resolve any costs issues and the appointment of a trustee to the share capital of the testator’s private company.
Catchwords: SUCCESSION — Construction — Gifts — the testator held 100 per cent of the shares in a private company, of the testator, which in turn held 50 per cent of the shares in a corporate group which ran a successful cleaning business – the testator gave the share capital of his private company on trust to his co-owner and business partner upon terms that she pay a periodic amount to his siblings from the business held by the private company – disputes arise after the death of the testator – ownership of the shares in the private company is not transferred to the business partner – the business partner does not make the periodic payments to the siblings – clause 11 of the will provides for a gift to the business partner after the siblings’ life estate – the business partner pre-deceases one of the siblings – whether in the events which have occurred clause 11 operates to gift the share capital of the private company to the business partner.
Original judgment source is linked above.
Legislation Cited: Trustee Act 1925, s 70
Cases Cited: Brennan v Permanent Trustee Company of New South Wales (1945) 73 CLR 404
Brooke v Garrod (1857) 2 De G & J 62; 441857) 2 De G & J 62
Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417
Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417
De Lorenzo v De Lorenzo (2020) 104 NSWLR 155
Fell v Fell (1922) 31 CLR 268
Hatzantonis v Lawrence [2003] NSWSC 914
Hulme v Perpetual Trustees Executors and Agency Co of Tasmania Ltd (1939) 62 CLR 242
In re Williams; Williams v Williams [1897] 2 Ch 12
Kauter v Kauter [2003] NSWSC 741
King v Perpetual Trustee Co Ltd (1955) 94 CLR 70
Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60
Muschinski v Dodds (1984) 160 CLR 583
Nicol v Chant (1905) 7 CLR 569
NSW Trustee and Guardian v Mathews [2024] NSWSC 595
NSW Trustee and Guardian v Reid [2023] NSWSC 1053
Perpetual Trustee Co (Ltd) v Waddell (1949) 49 SR (NSW) 266
Perrin v Morgan [1943] AC 399; 1 All ER 187
Re Brewis; Brewis v Brewis [1946] VLR 199
Re Willis [1996] 2 Qd R 664
Reeves v Reeves [2024] NSWSC 134
Sidle v Queensland Trustee Limited (1915) 20 CLR 557
Texts Cited: Dal Pont, Interpretation of Testamentary Documents, Second Edition, 2025, LexisNexis
Category: Principal judgment
Parties: Plaintiff: Jeremy Neil Glass
Defendant: Peter Tsivis
Representation: Counsel:
Plaintiff/Cross-defendant: M Condon SC
First Defendant/Second Cross-Claimant: S Chapple SC
Second Defendant/First Cross-Claimant: N Bilinski
Solicitors:
Plaintiff/Cross-defendant: Glass Goodwin Solicitors
First Defendant/Second Cross-Claimant: Bartier Perry
Second Defendant/First Cross-Claimant: Makinson d'Apice Lawyers
File Number(s): 2024/315473
Publication restriction: Nil
Angela Sakellis and George Tsivis married in 1968 and founded Broadlex Cleaning and Property Services (“Broadlex”) in 1969. The couple separated and divorced during the 1970s without having children together. But up until George’s death they remained equal business partners in Broadlex which their enterprise forged into a very successful business. George died on 13 October 2016 and Angela on 14 October 2023.
Mr Jeremy Glass, the administrator of George’s estate, brings these proceedings to determine the proper construction of clause 11 of George’s will, which was crafted to deal with his shareholding interests in Broadlex. Clause 11 made Angela trustee of George’s shareholding in the private company through which he held his interest in Broadlex. It also provided for George’s siblings, Peter Tsivis and Maria Sotiriodis, to draw a salary from Broadlex’s operations after George’s death. Clause 11 also allowed George’s shareholding in his private company to be transferred to Angela after George’s siblings died.
But the scheme contemplated by clause 11 broke down in multiple ways: the shares in George’s private company were not transferred to Angela; a salary was not paid to Peter and Maria, and then Angela predeceased Peter. These reasons consider how on its true construction clause 11 operates in these events. The precise questions for determination are presented once relevant further facts are outlined.
The proceedings were heard on 27 November 2023. Mr M Condon SC, instructed by Glass Goodwin Solicitors, appeared for the plaintiff, Mr Glass as administrator of George’s estate. Dr S. Chapple SC, instructed by Bartier Perry, appeared for the first defendant/second cross-claimant, Peter. Mr N. Bilinsky, instructed by Makinson & d'Apice Lawyers, appeared for the second defendant/first cross-claimant, the administrator of Angela’s estate.
For convenience, during the hearing the parties referred to family members by their first names as many of them had the same surname. Without intending any disrespect to any party, the Court does the same in these reasons. The parties also referred to George as “the deceased” and “the testator”. But as both Angela and Maria had died by the time of the hearing, it has also been convenient in these reasons, without intending any disrespect to any person, to refer to George generally although not exclusively by his name, rather than as “the deceased” or “the testator”.
An operating company known as Broadlex Services Pty Ltd (“Broadlex Services”) owned Broadlex’s business. Another entity, Broadlex Group Pty Ltd (“Broadlex Group”) held all the share capital in Broadlex Services.
George and Angela each held 50 per cent of the shares in Broadlex Group. George held his 50 per cent through Sequoyah Investments Pty Ltd (“Sequoyah”). Angela held her 50 per cent through Providential Enterprises Pty Ltd (“Providential”). George owned all the issued share capital of Sequoyah and was its sole director. Angela owned all the issued shares in Providential and was its sole director.
The business conducted by Broadlex Services was operated from commercial premises in Artarmon until shortly before the hearing, when they were relocated to North Strathfield. The registered proprietor of the Artarmon premises was Dupson Pty Ltd, from which Broadlex Services rented the Artarmon premises, was another company in which Angela and George held equal shareholdings and from which they derived income.
After George’s death on 13 October 2016, probate of his will dated 12 October 2016 was granted to his brother, Peter Tsivis, his de facto partner at the time of his death, Karen Leith Williams, and one of his nephews, Michael Tsivis. George was also survived by his sister Maria, but she died before these proceedings. George was also survived by several nieces and nephews.
Issues arose between the executors in the administration of George’s estate. This led to this Court on 13 December 2018 revoking the original grant of probate to them. At the same time administration of George’s estate with the will annexed was granted to the plaintiff, Mr Glass.
Angela died on 14 October 2023. Angela’s estate is interested in the outcome of these proceedings. But those interested in Angela’s estate are at issue as to which document represents her final testamentary wishes, dispute the subject of other unresolved proceedings in the Equity Division of this Court.
On 1 November 2024 Mr Paul Evans was appointed interim administrator of Angela’s estate. On 4 April 2025 Mr Evans’ powers as interim administrator were extended until further order. He represents Angela’s estate in these proceedings.
Maria’s estate had notice of these proceedings but did not seek to appear or put separate submissions.
The inventory of property with the December 2018 grant of administration to Mr Glass, estimated the value of George’s estate at $27,593,352.97 in New South Wales. It comprises real estate, shares and other personal property and cash and includes two ordinary shares in Sequoyah valued together at $5 million. George also held property in Queensland and the ACT.
The proper construction of Clause 11 of George’s will, which deals with his interest in Sequoyah, is the principal issue in these proceedings. Other parts of the will provide relevant background.
George’s will dealt in an orderly way with the range of persons to whom he owed testamentary obligations. He made minor gifts to charity and then made specific provision for various family members, including his partner, Karen (clause 6); his brother and sister, Peter and Maria (clause 10); his accountant (clause 12); his nephew (clauses 13 - 15); his niece (clauses 16 – 17); and his other nieces and nephews (clause 18).
George directed his executors as to how they might realise or deal with specific assets of his estate, namely The George Tsivis Family Trust (clauses 7 – 9); Sequoyah (clause 11); and various real properties (clauses 19 – 20). Finally, George left the residue of his estate to his partner, siblings, and nieces and nephews (clause 21).
Clause 11 of the will provides:
“Sequoyah Investments Pty Ltd ACN 612 909 190
(a) My business partner, Angela Sakellis shall ensure that:
(i) An amount equivalent to my annual salary in the sum of $300,000 payable to me from the Broadlex Group continues to be paid on a fortnightly basis to my brother, Peter Tsivis and my sister, Maria Sotiriadis in equal shares and on the death of one the other survivor shall be paid the full amount of $300,000 per annum for the duration of their life;
(ii) The payments referred to in the above sub-paragraph (i) may be paid as dividends out of Sequoyah Investments Pty Ltd ACN 612 909 190;
(b) On the death of my brother, Peter Tsivis and my sister, Maria Sotiriadis, my business partner, Angela Sakellis shall acquire the sole beneficial ownership of my shares in Sequoyah Investments Pty Ltd ACN 612 909 190;
(c) The gift to my business partner, Angela Sakellis in the above paragraph (b) is subject to and conditional upon her fully complying with the above paragraph (a).”
Due to regrettable conflict and protracted indecision during negotiations George’s clause 11 scheme did not operate as intended: Angela never gained the legal title to George’s Sequoyah shares contemplated in the clause 11 chapeau; no clause 11(a) salary equivalent or dividends were paid from the Broadlex Group to Sequoyah to Peter or Maria; contrary to the assumption in clause 11(b) Angela predeceased Peter; and now the parties are at issue as to whether on its proper construction the gift to Angela in clause 11(c) operates for the benefit of her estate in the events which have occurred.
George made several earlier wills. The Court has not found scrutiny of these earlier instruments to assist in construing the terms of clause 11 of his last will, although it can be observed that his testamentary preferences remain generally consistent over the years. These earlier wills are briefly summarised later in these reasons.
The principles that apply to the construction of wills and other testamentary instruments are well established. In Fell v Fell (1922) 31 CLR 268 at 273–4, Isaacs J stated the main principles, and they have been applied repeatedly since. The first two of these principles are that the meaning must be discovered from the writing of the will itself “aided only by such extrinsic evidence as is necessary in order to enable us to understand the words which the testator has used”; and, that the instrument must receive a construction according to the plain meaning of the words looking at the whole instrument: see also Hatzantonis v Lawrence [2003] NSWSC 914 at [6]–[10], NSW Trustee and Guardian v Reid [2023] NSWSC 1053 and Reeves v Reeves [2024] NSWSC 134 at [371]–[386].
What is sometimes called the “armchair principle” may be applied in the construction of a will. Under that principle the Court may ascertain all the facts known to the testator at the time the will was made to place itself in the testator’s position to ascertain the meaning and application of the language in the will, as the testator would have understood it: Layer v Burns Philp Trustee Co Ltd (1986) 6 NSWLR 60 at 65.
The task of construction involves moulding the language of the testator to carry into effect as far as possible the intention which the testator has, in the whole will, sufficiently declared: Brennan v Permanent Trustee Company of New South Wales (1945) 73 CLR 404 at 414. In Perrin v Morgan [1943] AC 399; 1 All ER 187 (at 190) Viscount Simon LC stated:
… the fundamental rule in construing the language of a will is to put upon the words used the meaning which, having regard to the terms of the will, the testator intended.
The correct approach to be adopted by the Court in interpreting a will containing ordinary English words “is not to assume that one of several meanings holds the field as the correct meaning until it is ousted by some other meaning regarded as ‘non-legal’, but to ascertain without prejudice as between various usual meanings which is the correct”: Perrin v Morgan (at 407–408). A will should not be construed in a strictly technical or legalistic sense, and the construction should be sensitive to the factual context of ordinary life and circumstances: Re Willis [1996] 2 Qd R 664 (‘Willis’) at 667.
The Court’s duty is to ascertain so far as is possible what the will maker intended by his or her words, expressly or implicitly, and to give effect as far as possible to that declared testamentary intention: Sidle v Queensland Trustee Limited (1915) 20 CLR 557; [1915] HCA 48 at 560-1, Fell v Fell at 273-4 and Hulme v Perpetual Trustees Executors and Agency Co of Tasmania Ltd (1939) 62 CLR 242; HCA 10 at 266 (“Hulme”). The first duty of the Court in ascertaining the testator’s intention is to find that intention in the writing of the will: Nicol v Chant (1905) 7 CLR 569; HCA 4 at 588. The Court will frequently search for and consider any scheme, plan or general arrangement in a testator’s disposition of property: Hulme at [259] and [265].
The testator’s intention must be discovered from the words of the will itself, aided only by “such facts as existed and were known to the testator at the date of the will” which may be admitted to assist in construing the language of the will: King v Perpetual Trustee Co Ltd (1955) 94 CLR 70, at 78 and De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351 at [50].
These principles are also conveniently and comprehensively summarised by Meek J in NSW Trustee and Guardian v M**athews [2024] NSWSC 595 at [46]-[58].
Gifts to a person conditional upon him or her making regular defined payments to another are not uncommon and are valid dispositions: Re Brewis; Brewis v Brewis [1946] VLR 199 at 204 per O’Bryan J.
Some limited background concerning George’s testamentary history is useful. George made a detailed will on 19 December 2013, which appointed Peter, Maria, and his accountant, as his executors and trustees. After giving legacies to several identified charities, he made extensive provision for his partner, Karen Williams, his siblings, Peter and Maria and his nieces and nephews. He divided the residue of his estate into nine parts, giving four of those nine parts to his siblings and the other five parts to his nieces and nephews. No provision of any kind was made for Angela.
George made another will on 21 April 2016 of which select charities, Karen Williams, his siblings, Peter and Maria and his nieces and nephews were the beneficiaries in a structure close to his 2013 will. But in his 2016 will George dealt specifically with his shares in the Broadlex Group, giving them (or the proceeds of their sale) to Peter and Maria but subject to the grant to Angela of an option to purchase the shares for market value within 12 months of his death. Sequoyah was incorporated to hold George’s Sequoyah shares after the April 2016 will. Apart from the option to purchase George’s shares in the Broadlex Group at market value, no provision was made for Angela in this 2016 will.
George’s health was declining in early August 2016. On 8 October 2016, George’s accountant telephoned his solicitor to give instructions for the making of urgent changes to George’s will. On that same day, Ms Williams sent to the George’s solicitor instructions about aspects of another will, which it may be inferred came from George. The presently relevant part of those instructions was the following:
“My current annual salary of $350,000 as at 8/10/16. My fifty percent (50%) share of Broadlex Group of companies. Angela Sakellis will remain as sole owner of Broadlex Group of companies. Angela will pay my usual salary fortnightly regardless and pay 50% to my brother Peter Tsivis and Maria (Mary) Sotiriadis. Any profits made from my 50% of the company will also be split 50% each to both Peter Tsivis and Maria Sotiriadis six monthly until each person passes away. If Peter passes away before Maria he will receive all wages and profits and if Maria passes away, she will receive all wages and profits until both are deceased.”
George’s solicitor crafted another will to give effect to these and other instructions, which George executed on 9 October 2024. It contained a clause 11 similar in structure to that in the final will, except the annual payments of $300,000 to Peter and Maria under the then clause 11(a) were supplemented by an additional annual payment of 50% of the annual net rental income after tax derived by Dupson Pty Ltd from its rental property in Artarmon. And under the then clause 11(b) and (c), Angela would also take a gift of Dupson Pty Ltd’s rental property in Artarmon.
But George gave further instructions on 12 October 2016 to remove references to Dupson Pty Ltd in clause 11. The following day George executed his final will which removed any reference to Dupson Pty Ltd in clause 11.
Following George’s death, the then legal personal representatives of George’s estate did not transfer legal title in the Sequoyah shares to Angela to vest her with trusteeship of those shares. Instead, conflict within George’s estate followed by negotiations between George’s estate and Angela led to a stasis in which the parties talked but disagreed about the price at which Angela might buy out Peter and Maria’s life estate. There seemed to be little impetus on either side to follow the terms of clause 11(a) whilst the negotiations continued. Looked at objectively, both parties gained some advantage in the negotiations from doing nothing. George’s estate did not give full control of Broadlex to Angela. And Angela did not ensure payment of the $300,000 per annum to Peter and Maria. That the stasis persisted for so long seems to indicate that to an extent it suited both sides as they continued their negotiations.
Angela continued to hold legal title to only her 50 per cent of the shares in Broadlex Group. Angela’s estate now contends that the failure to transfer the legal title to the Sequoyah shares to Angela inhibited her ability to satisfy clause 11(a)(i). Whether that is a relevant matter to the Court’s consideration is discussed later in these reasons.
Regrettably these negotiations were drawn out over several years. They continued after Mr Glass was appointed in December 2018. For years the parties were more focussed on reaching a final settlement than making clause 11 work according to its true construction – until they changed their minds. This happened on 30 May 2022 when Peter indicated to Angela – perhaps frustrated by the lack of progress in the negotiations – that instead of her buying out his interests that he would prefer to “go by the will”.
Angela’s estate submitted that Peter’s expressed preference on 30 May 2022 to “go by the will” was not a demand for payment of the $300,000 annuity. Angela’s estate submitted that Angela clearly desired to secure her eventual ownership of the shares and to fulfil her obligations under clause 11. But her estate submitted that she wanted to be given legal title to the Sequoyah shares in accordance with clause 11.
Angela communicated with George’s estate through her solicitors, Sparke Helmore, in their email to Mr Glass on 1 July 2022, asking for the matter to proceed without further delay, as follows:
“As you are aware, our client Ms Angela Sakellis, has attempted to negotiate a settlement of the respective rights and obligations of the trustee (Ms Sakellis) and the holders of the life interests (Peter Tsivis and Maria Sotiriadis). Negotiations have been ongoing for a number of years now as you are aware and more recently, they were conducted between September 2021 and June this year with a view to terminating the clause 11 trust so that Peter and Maria would receive a lump sum payment in lieu of the annual payment of $300,000 stipulated by clause 11(a). Unfortunately, these negotiations have failed. Our client believes the performance of the obligations under clause 11 of the Will should not be further delayed as any further negotiations will not achieve a resolution. In order to perform her duty under clause 11, Ms Sakellis asks you as Administrator of the will to transfer the deceased’s shares in Sequoyah Investments Pty Ltd (ACN 612 909 190) to Ms Sakellis in her capacity as the trustee of the clause 11 testamentary trust (and appointed as a director of Sequoyah).
Ms Sakellis will then see to the performance of her duties, by arranging for the annual payment of $300,000 as prescribed by clause 11(a)”
Neither side brought a construction suit to ascertain the meaning of clause 11. But the contested correspondence with Peter continued. Peter replied personally to Angela on 8 July 2022, continuing negotiations by asking that the annual payment of $300,000 be “fully franked at 30 per cent”.
Angela’s estate submits that Peter’s expectation of payment with franked dividends from Sequoyah was something that Angela could not achieve without the shares being transferred to her giving her full voting control of Sequoyah. But if the parties had reached agreement on that matter, the transfer of the legal estate to Angela could have been part of the agreed package.
On 14 July 2023 Angela wrote to Peter to follow-up a conversation which had taken place between them:
“When we were talking this afternoon, I was trying to explain to you about the dividends but somehow, I was not being understood. I have not changed my mind as I always said I want to pay yourself and Maria in accordance [with] clause 11 of the Late GT Will and I do not have a problem with that.
I do want to complete this part of the Will as soon as possible but we must allow the Lawyers to carry out their duty, and they will advise you.”
“The action that Ms Sakellis requires is for the administrator to transfer the Sequoyah shares to our client. Ms Sakellis also stands ready and willing to pay the balance of funds, and fortnightly payments moving forward. Kindly confirm that your clients accept the transfer of the shares by the administrator to Ms Sakellis and provide bank account details of your clients for direct deposits.
If the matter cannot be resolved now through the transfer of the Sequoyah shares to Ms Sakellis and corresponding payments to your clients, an application will need to be made to the Court on the matter.
Maria died on 16 December 2022. The shares were not transferred before Angela’s subsequent death on 14 October 2023. At one point Peter contended that through her negotiating stance Angela had disclaimed any interest she may have had in the shares. Her estate disputed this. But Peter did not ultimately pursue this submission.
The financial statements of Broadlex Group, available at least for more recent years, shows that it had ample financial capacity to meet the burden of paying $300,000 in salary equivalent per year to Peter and Maria. The Broadlex Group’s consolidated financial statements for 30 June 2023 show a strong balance sheet with total equity of $18,673,953 and current assets in the form of cash and cash equivalents being $13,318,687.
The full range of issues in the proceedings are well articulated by Mr Glass’s Summons and the two Cross-Claims, one brought on behalf of Angela’s estate and the other on Peter’s behalf. Not all the issues raised need to be decided under the Court’s construction of clause 11.
Mr Glass’s Summons dated 26 August 2024, seeks determination of the following questions on the construction of clause 11 of the will:
Whether Mr Glass as administrator of George’s estate is required to transfer the testator’s shares in Sequoyah to Angela’s legal personal representative:
(a) only on him giving an undertaking that he will make or procure the payments referred to in clause 11(a); or (b) regardless of him providing an undertaking that he will make or procure the payments referred to in clause 11(a)
(a) Mr Glass as administrator must transfer the Sequoyah shares to Angela’s legal personal representative; or (b) the Sequoyah shares form part of the residue of the deceased’s estate.
Whether Angela disclaimed her interest in the Sequoyah shares – although this issue was not ultimately pursued.
Each of Peter and the legal personal representative of Angela’s estate has filed a Cross-Summons in which they raised issues as to the proper construction of clause 11.
Mr Evans, as the legal personal representative of Angela’s estate filed the First Cross-Summons on 18 December 2024. Angela’s estate seeks an order that the Mr Glass transfer the Sequoyah shares to him, to hold on trust for Peter for his life, conditional upon:
the legal personal representative of Angela’s estate making payments due to Peter and to Maria’s estate, since the time of the deceased’s death pursuant to clause 11(a) of George’s will; and
undertaking to continue to make such payments until Peter’s death.
Peter has filed a Second Cross-Summons on 20 December 2024 seeking a declaration that:
Peter is entitled, and has been so entitled since the date of the deceased’s death, to the beneficial interest in the Shares; and
On Peter’s death, by reason of the failure by Angela to fulfill the conditions in clause 11(a) of the will, the Sequoyah shares form part of the residue of the deceased’s estate.
Peter also seeks an order pursuant to s 70 of the Trustee Act 1925 that he or some other appropriate person, be appointed as trustee of the Sequoyah shares during Peter’s lifetime.
The parties did not contest whether clause 11(a) is a condition precedent to the clause 11 gift of the Sequoyah shares to Angela. The clear words of clause 11 (c) show that the obligations clause 11(a) is a condition precedent to the operation of the gift in clause 11 (c). Whether clause 11(c) might constitute a condition subsequent was mentioned that obliquely in argument. But the principal issue between the parties was whether within that condition precedent, time is of the essence in the performance of the payment obligations in clause 11(a). Clause 11 does not contain a gift over, expressly providing for what should happen on failure of the condition precedent.
Angela’s estate submits that time is not of the essence in Angela performing the payment obligations in clause 11(a). Her submissions draw upon authorities in relation to testamentary instruments which she submits show that equity is disinclined to construe conditional gifts creating personal obligations as being subject to forfeiture. Her submissions also draw by analogy upon equitable principles developed with respect to conditional gifts and transactions inter vivos, to show that there are ways other than by forfeiture for equity to give just effect to conditional gifts.
Before proceeding to the Court’s analysis of clause 11, it is useful to examine the authorities in relation to whether in the construction of conditions precedent to gifts in testamentary instruments time should be regarded as of the essence.
Angela’s estate submits that the line of authority exemplified in cases such as Re Packard [1920] 1 Ch 596 and Re Goodwin (1924) 2 Ch 26, shows that especially in the absence of a gift over, a testamentary gift will not be allowed to fail merely because a condition is not satisfied within a particular time.
Re Packard involved a bequest of a legacy to the testator’s daughter, subject to a condition that within one year of the testator’s death, she would settle upon certain trusts a sum to which she was entitled under a deed of settlement. There was no gift over if the legatee failed to perform the condition, nor any express direction that it would fall into residue. Sargent J concluded that:
“It seems to me that there is nothing to show that the direction that the settlement should be executed within twelve months is more than a directory provision. It is not of the essence or the substance of the condition; and it is quite clear that all the parties interested can be placed in precisely the same position as if the condition had been literally and accurately complied with, because the funds, which ought to have been settled within twelve months of the death of the testator, have throughout been treated as if they had been so settled, and they can now be settled in the way required, so that there will be a continuous settlement of the funds as from the death of the testator.”
“It is well settled by authority that where a gift in a will is made subject to a condition, even a condition precedent, to be performed within a specified time, but the condition is not in fact performed within that time, then, at any rate in the absence of an express gift over, it is always a question for the court to determine whether the time so specified was of the essence of the matter. In determining that question the court must have regard to what was presumably the intention of the testator in inserting the condition, what it was that he decided to bring about or to guard against; and if the court finds that a performance of the condition at a time subsequent to the expiration of the period fixed by the testator in substance provides for the very thing that the testator intended to provide for, so that all parties can be put in substantially the same position as they would have been in had the condition been performed within the proper time, time is not regarded as of the essence, and such performance is treated as sufficient compliance with the condition.”
Romer J determined that the only object of the testator in imposing the condition was that the smaller annuity be released and that the widow should not be paid both the larger and the small annuity and that the testator’s object in fixing a time within which the release should be executed was to enable the executors to make early distribution of his estate amongst the beneficiaries. Romer J determined that an execution of a release by the widow at the time of the hearing, had she survived and released her claim to the smaller annuity, would have had precisely the same effect as though she had executed the release within the six-month period specified by the testator.
Romer J rejected an argument that the annuity in that case was “personal to the annuitant [the widow]” and therefore not enforceable by her executors. He distinguished gifts that were “personal” to legatee as those that “cannot of course be complied with by the legatee’s executors” such as conditions to “take and use a name, or to marry, or to occupy a house, or conditions of that sort”.
In Re Goldsmith [1947] 1 Ch 339 an English case applying in Re Packard and Re Goodwin, the testator gave his estate to his trustees to pay the net income to his wife during her lifetime. He directed that, on his wife’s death, a property would go to one Henry Bingham, but subject to Mr Bingham paying into the residuary estate the sum of 800 pounds within 6 months of the testator’s death. Mr Bingham did not pay the sum within the specified time and the widow then died. Mr Bingham sought to pay the 800 pounds after the death of the widow to obtain the property. The question posed for the court was whether Mr Bingham became entitled to the property after the widow’s death, notwithstanding his failure to pay the 800 pounds within 6 months of the testator’s death. There was no gift over in the will.
Wynn-Parry J concluded that the testator must have intended for the payments to be made within 6 months of his death for the purpose of “… bringing about what was the necessary consequence of those payments, namely, an increase in his residuary estate, which would have provided additional income for his widow during her life”. Wynn-Parry J held that it was “clear that a performance of the condition at this date [the time of the hearing] cannot result in placing these parties in the same position as if the terms of the will had been strictly complied with, for within the phrase ‘the parties’ must be included the life tenant, the widow, who is now dead”. On that basis, Wynn-Parry J that the conditional devise of the property failed.
In New South Wales in Perpetual Trustee Co (Ltd) v Waddell (1949) 49 SR (NSW) 266, Sugerman J closely examined the true scope of the principle stated in Re Packard and Re Goodwin*.* The case concerned a gift to the trustees of the Big Brother movement in this State. The Big Brother Movement (“the Movement”) brought boys from Great Britain to New South Wales to provide opportunities for them. The testator, who had been a chairman of the Movement gifted a parcel of shares to the Movement, provided it satisfied the following condition that, “if the said Movement shall during the first year after my death be duly functioning and actually bringing boys to New South Wales during such year at the average rate of not less than 10 boys per month”.
The testator died in August 1939, just before the outbreak of World War II. Upon the outbreak of war, the British government prohibited the movement of migrants by sea from Britain. Due to a then recent revival of the Movement, this meant that boys had only been migrating to New South Wales for a period of six months after the testator’s death, but an average rate of 10 per month. After World War II hostilities ceased, limited migration of boys resumed. But the condition had not been fulfilled, because more than 10 boys per month had not been brought to New South Wales by the Movement for the 12 months after the testator’s death.
After citing the words of Romer J in Re Goodwin*,* in a passage of illuminating analysis set out in full below, Sugerman J said:
“That principle appears to me to be capable of application only where there is a condition which in itself has no reference to time and could be performed at any time, coupled with a requirement that it be performed within a specified time, and where what the testator sought to bring about by imposing the condition may in substance be brought about by the performance of the condition otherwise than within the specified time limit. That result appears to me to flow as well from the nature of the thing as from the mode of statement of the principle by Romer J., which has been carried into the later cases. All the cases cited (apart from In re Sage (1), in which the problem was a different one) are cases in which the condition is of such a kind that if the reference to time were deleted from the will there would remain a sufficient statement of a condition capable of being performed in accordance with its terms without necessity for alteration. It is performance of that condition which Romer J. referred to as "performance of the condition at a time subsequent to the expiration of the period fixed by the testator" and it is in relation to such performance outside the prescribed time that the question arises whether it " in substance provides for the very thing that the testator intended to provide for."
This mode of reasoning is, I think, inapplicable where the reference to time is an integral part of the requirement of the condition. In such a case the statement of the condition itself would either become meaningless or a statement of a different condition if the reference to time were omitted from it; what would be involved would be the alteration of the condition or the substitution of another condition for it. To do that is beyond the scope of a doctrine whereby time is treated as not being of the essence.”
Sugerman J found that it had not been shown that during any period of one year after the testator’s death that boys had been brought to New South Wales at more than the average rate of 10 per month. Sugerman J accepted that the underlying purpose of the condition was to ensure that the Movement could only have the legacy if it was an active movement. But Sugerman J cautioned against ignoring the terms of the condition by seeking to use the purpose of its insertion to “proceed to ignore the condition and accept something else as sufficient fulfilment of the purpose”.
Sugerman J answered in the negative the question posed in the summons as to whether the trustees of the Movement were entitled to the gift and concluded with the following passage:
“I am therefore unable to accept the arguments based upon the cases cited. The question which was considered in those cases does not in my opinion arise where the element of time is an integral part of the requirement of the condition itself as distinct from a mere temporal limit for the performance of a condition otherwise complete in itself. The doctrine whereunder in a proper case the Court may treat non-timeous performance as sufficient on the ground that time is not of the essence does not sanction variation of a condition of which the time element is an integral part, or the ignoring of that condition, or the substitution of some other condition for it, by reference to the testator's purpose underlying its insertion.”
Sugerman J’s analysis of the principle in Re Packard and Re Goodwin limits its application to cases, unlike the gift in clause 11, where the condition precedent is not self-contained and able to be described and implemented without the time element.
Sugerman J’s analysis has since been applied in this state by Helsham J (as his Honour then was) in Re Gardiner (1971) 2 NSWLR 494. In that case the testator’s will gave his whole estate to his son, Ivor, “subject to my son paying the sum of £1,000 within two years from my death unto my son Albert”. But Ivor did not pay the specified sum to Albert. within the time mentioned. Albert sought the determination of the question whether the gift to Ivor, failed, and there being no gift over, whether the estate devolved as on an intestacy. At the time of his death the testator was a widower with five sons living and no other issue.
Helsham J concluded that it did not matter whether the condition in the testator’s will was construed as a condition precedent or a condition subsequent, the question was whether there was some way of reading the words relating to time so that they do not form part of the condition and may be treated as not being essential to the operation of the condition, either to prevent the gift from vesting or to divest it if it had already become vested. Helsham J said that he found “that the law relating to this aspect is most confused” but that the judgment of Lord Cranworth in Brooke v Garrod (1857) 2 De G & J 62; 441857) 2 De G & J 62; 44 911 was “a real pointer to the way in which one should approach this topic”. Helsham J then records that Lord Cranworth’s judgment in Brooke v Garrod states the principle in much the same terms as Sugerman J did in Perpetual Trustee Co (Ltd) v Waddell. Then Helsham J applied “not only the reasoning but the words of Sugerman J” in Perpetual Trustee Co (Ltd) v Waddell and said (at 499):
“I think it is impossible to hold in this case that the words of the testator do other than make the performance within a particular time an integral part of the requirement of the condition. Otherwise, one has to read the condition without the words of time in it and it seems to me that in that circumstance it becomes a completely different condition.”
Helsham J concluded that the requirement of payment in the testator’s will was a true condition of the gift which the testator made to his son the defendant and that the condition having been broken, the gift was destroyed or never became operative.
The parties’ and the Court’s research reveal surprisingly little later consideration of Perpetual Trustee Co (Ltd) v Waddell and Re Gardiner. The latter case was referred to in a decision of Young J (as his Honour then was) to which Mr Bilinsky took the Court, in Kauter v Kauter [2003] NSWSC 741 at [54]. The learned author of Dal Pont, Interpretation of Testamentary Documents, Second Edition, 2025*,* LexisNexis, at [11.9] states the law consistently with the Court’s present analysis.
Close analysis of clause 11 reveals its meaning. The chapeau to clause 11 operates at George’s death to make Angela the trustee of a trust of George’s Sequoyah shares. The trustee, Angela “shall hold all of my shares in Sequoyah” on trust for Peter and Maria for life. But the trust (referred to in these reasons as “the clause 11 trust”) is constituted “subject to the following”. What follows defines two conditions: the payment obligations of Angela to Peter and Maria during their lifetimes (clause 11(a)); and the terms of the gift of the trust property, the Sequoyah shares, to Angela in remainder (clause 11 (b) and (c)).
Several features of clause 11(a) should be noted. First, subclause (a) requires Angela to “ensure” that an amount “equivalent to my annual salary in the sum of $300,000 payable to me from the Broadlex Group” is paid to Peter and Maria. The obligation lies on Angela to take the necessary steps to “ensure” the sum is paid. The testator can be assumed to have been familiar with the financial position of the Broadlex Group and generally with the circumstances of his “business partner” Angela and therefore her capacity to so “ensure”. By describing the $300,000 as an amount “equivalent to my annual salary” he was signalling that by this condition he was not seeking to impose any additional burden on the Broadlex Group’s operations beyond what it was already bearing by paying him a salary, if the sum was to be paid by the Broadlex Group. Because this was an existing liability of the Broadlex Group, Angela was more likely to be able to “ensure” that the $300,000 be paid.
The second notable feature of subclause (a) is that it provides for what will happen if Maria or Peter die before Angela: the $300,000 payable by the trustee’s control of Broadlex Group will continue to be paid to the survivor “for the duration of their life”. The defined $300,000 benefit of the life estate continues for the survivor, until his or her death and the subclause (b) gift only operates then.
The third notable feature of subclause (a) is that it provides for a high degree of certainty that Peter and Maria would receive an annuity of a specific amount. The amount of $300,000 does not increase in quantum but remains fixed throughout the life estate at $300,000 per annum. The annuity does not change with CPI increases or variation in the salaries that would have been payable from the Broadlex Group during the life estate. Presumably over time in an inflationary world, it would therefore become less burdensome to the payer.
The fourth notable feature of subclause (a) is that it does not specify a single or a precise source of the annuity and does not require that the annuity be paid only by the Broadlex Group, although the annuity may and would most probably be paid by the Broadlex Group. The better reading of subclause (a)(i) is that the words “in the sum of $300,000 payable to me from the Broadlex Group” are descriptive of “my annual salary” to which the annuity to be paid is “equivalent”. What is to be paid is not a salary but an annuity. The words “an amount equivalent to my annual salary” (emphasis added) is only an anchoring point to show the general basis for the selection of the quantum. Subclause (a)(ii) illustrates the flexibility of the source of the annuity, which could come through Sequoyah, rather than directly from the Broadlex Group if that was regarded as more tax effective.
Subclauses (b) and (c) constitute the gift of the Sequoyah shares to Angela and should be read together, as defining the terms of the gift. The clear words of paragraph (b), “on the death of my brother, Peter Tsivis and my sister, Maria Sotiriadis my business partner will acquire”, create a gift in remainder that is deferred until after the deaths of both the testator’s siblings. Clause 11 was not intended to create a gift of the beneficial interest in only part of the Sequoyah shares on the death only of Maria or Peter. The clear words of paragraph (a) reaffirm this construction, requiring continuing payment of the $300,000 to the survivor of Peter and Maria “during their lifetime”.
Neither party argued that the gift to Angela failed merely because Angela did not survive Peter. The obligations created by subclause 11(a) are only obligations upon Angela to “ensure” payment. They are not obligations personal to her. Even though the testator describes her as “my business partner” these payment obligations can readily be carried out on behalf of her estate or anyone on her behalf.
Clause 11 would work without subclause 11(c) to give Angela the remainder interest in the Sequoyah shares. The purpose of adding subclause 11(c) to qualify the obligation in subclause 11(b) is to emphasise that strict compliance with subclause 11(a) is a condition precedent to subclause 11(b). Subclause 11(c) is replete with language pointing to an intent of setting a standard of strict compliance – “subject to and conditional upon” and “fully complying”. These words are sufficient to make strict compliance with the time requirements in subclause 11(a) essential.
But analysis of clause 11 against Sugerman J’s reasoning in Perpetual Trustee Co (Ltd) v Waddell as to whether time is of the essence in conditional gifts, makes this conclusion even stronger.
When Sugerman J’s reasoning is applied here, the clause 11(a) condition in the present case is one in which the element of time must be seen an integral part of the requirement of the condition itself. Indeed, specific time elements are densely embedded in the clause 11(a) gift in distinct and cumulative ways: (a) the payment must be made “on a fortnightly basis”; (b) the payment must “continue to be paid”; (c) the payment must sum to “the full amount of $300,000 per annum”; and (d) the payment shall be “for the duration of their life”. This is not a case of the imposition of a temporal limit for the performance of the payment condition, where the payment condition is otherwise complete. The evident purpose of clause 11(a) is for Angela to ensure that an adequate and secure fortnightly income is provided to Peter and Maria during their lifetimes, as the price of Angela receiving the gift of George’s Sequoyah shares.
Here it is put on behalf of Angela’s estate that an undertaking to provide a lump sum equivalent to the past payments due under clause 11(a) could be given to preserve the right of Angela’s estate to the remainder in the Sequoyah shares.
But in the Court’s view, to try to restate the clause 11 condition without reference to each of the time elements in (a)-(d) above would, to use the language of Sugerman J, either make the condition meaningless or would be to state a different condition. That would involve the alteration of the condition or the substitution of another condition for it, which as Sugerman J explained “is beyond the scope of a doctrine whereby time is treated as not being of the essence”. Any attempt to pay arrears to Peter and Maria’s estate in a lump sum now would ignore each of the specific time elements in (a)-(d) above and do nothing to provide an adequate and secure fortnightly income to Peter and Maria during their lifetimes. This is not least because nothing can now be paid to Maria during her lifetime.
Angela’s estate’s submissions seek to reframe the intent of clause 11 as being “to secure for her the ultimate ownership of the Sequoyah shares”. Using the language of conditions subsequent, the submission put on behalf of her estate is that “any provision for forfeiture arising from Angela’s non-fulfilment of the personal obligation to make payment ought be viewed as security for the production of that ultimate result”.
This characterisation of the intent of clause 11 is incomplete and ignores the wider purpose of providing adequate and secure fortnightly income to Peter and Maria during their lifetimes, as the price of her receiving the gift of George’s Sequoyah shares. George’s will benefits his de facto partner and all the rest of his family through detailed provisions providing for his siblings and his nieces and nephews, who also all share the residue of his estate. Angela receives nothing other than the Sequoyah shares. And she, or her estate, only may receive them absolutely under clause 11 by earning them through consistent support for his closest living relatives by ensuring the specified payments are made to them. This is generally consistent with Angela’s treatment in George’s prior wills.
“[26] The chapeau to clause 11 makes clear that the beneficial interest in the Shares is to be held on trust for lifetime of Peter and Maria, and on the death of one of them, the beneficial interest in all of the Shares is to be held on trust for the lifetime of the survivor.
[27] The bequest of the beneficial interest in the Shares is said to be “subject to” sub-clauses (a) – (c). However, those subparagraphs do not, in substance, impose any conditions upon Peter and Maria. There is nothing in sub-clauses (a) – (c) that limits the benefits that Peter and Maria may derive from the Shares (for example, to limit any benefit to receiving only a salary of $300,000). It is true that the deceased contemplated that a dividend might be declared to satisfy payment of the salary, but there is nothing to suggest that if a dividend in excess of $300,000 was declared in a particular year that Peter and Maria would not be entitled to those additional funds. Understood in that way, the effect of sub-clauses (a) – (c) is to confer an additional benefit upon Peter and Maria – to ensure that they receive an annual payment of at least $300,000 but does not limit the benefits that they might receive in each year.
[28] That is an important distinction. Any non-compliance by Angela (or her legal personal representative) with the conditions in sub-clauses (a) – (c) does not, and cannot, derogate from the beneficial interest conferred upon Peter and Maria in the opening words of Clause 11. It must follow, therefore, that the gift in clause 11 of the beneficial interest in the Sequoyah shares to Peter and Maria for life vests immediately. Even in the event that Angela chooses not to comply with the condition in sub-clauses (a) – (c), Peter and Maria remain entitled during their lifetimes to any benefits derived from their ownership of the beneficial interest in those shares (eg. payment of dividends).”
To the extent that Peter’s submissions contend that the gift in clause 11 of the beneficial interest in the Sequoyah shares to Peter and Maria for life vests immediately, that is consistent with the Court’s analysis of clause 11.
Peter also put submissions as to the operation of the terms of sub-clauses 11 (a) – (c), contending that the period in which the relevant condition must be filled necessarily occurs prior to Angela becoming entitled to the beneficial interest in the shares and that the obligation lies on Angela personally. Peter put this submission in paragraphs [29] – [31] of his written submissions as follows:
“[29] Sub-clauses (a) - (c) provide for Angela to receive the remainder interest in the Sequoyah shares on the death of both Peter and Maria, but only on the satisfaction of a particular condition. The sub-paragraphs operate as follows:
a) Sub-paragraph (a) imposes an obligation on Angela to "ensure" that the deceased's annual salary of $300,000 "continues to be paid on a fortnightly basis" to Peter and Maria in equal shares, and on the death of one, to the survivor, for the duration of their life. The deceased expressly permitted those payments to be made by way of dividend declared by Sequoyah but did not require the salary to be paid in that manner.
b) Sub-paragraphs (b) and (c) provide that, on the death of both Peter and Maria, Angela is to become the sole beneficial owner of the shares in Sequoyah, but that gift is said to be "subject to and conditional upon her fully complying" (emphasis added) with the payment obligation.
[30] The obligation imposed on Angela to "ensure" that Peter and Maria receive payment of the salary is a personal one. A natural reading of that obligation is to require Angela personally to make certain or to guarantee the payment. If the testator had intended to impose a lesser obligation, he might have used the word "procure", from which it might be inferred that Angela was to cause Sequoyah to make the salary payments. That sub-clause (a) imposes a personal obligation is confirmed by the fact that Angela is referred to personally in that sub-clause, and that in the event that she "ensures" the payments are made, she is to personally receive the beneficial interest in the Shares.
[31] The condition in sub-clause (a) requires payment of the salary during the lifetime of Peter and Maria. It is only on the death of Peter and Maria (and Angela having 'fully complied' with the payment obligation), that Angela is to receive the beneficial ownership of the Shares. Thus, the period during which the condition must be fulfilled necessarily occurs prior to Angela becoming entitled to the beneficial interest in the shares. It must follow, therefore, that the condition imposed by sub-paragraph (c) is a condition precedent to Angela taking any beneficial interest in the Shares.”
Peter’s submission that Angela’s compliance with clause 11 (c) is a condition precedent to Angela taking any beneficial interest in the Shares is persuasive. His submission that the obligation imposed on Angela to "ensure" requires her personally to make certain or to guarantee the payment of $300,000 per annum, accords with the Court’s analysis of clause 11. The April 2016 will gives Angela an option to acquire George’s Broadlex Group shares by paying market value for them from her own funds. Clause 11 of the final will has changed that to give her the option of payment occurring through funds that flow to Sequoyah at the same time as to Providential. But the important aspect of the obligation is to “ensure” that the payment takes place to support George’s siblings.
Peter’s submissions highlight the absence from clause 11(a) of any express time by which Angela must “ensure” that payments of George’s former salary are made to Peter and Maria, or the time by which that must commence. But he submits that that gap is filled by other matters, as his written submissions put at paragraphs [32] – [33]:
“[32] Clause 11(a) does not expressly impose a time by which Angela must “ensure” that the payments of the deceased’s former salary to Peter and Maria must commence. However, the testator clearly intended to incorporate a temporal element by reference to the following:
a) Angela is directed to ensure that the deceased’s salary “continues” to be paid after his death – the use of the word “continues” suggests that the salary payments must persist following the deceased’s death. An interruption in those payments that is anything more that slight is clearly inconsistent with a continuing payment of the deceased’s salary to Peter and Maria; and
b) Angela is directed to ensure that the payments are made on a ‘fortnighty basis’. Even if there was a slight interruption in payments following the death of the deceased, the clear intention of the deceased was that those payments would be made regularly and periodically during the lifetime of Peter and Maria.
[33] Understood in this way, Angela was required to “ensure” that the salary payments be made to Peter and Maria following the death of the deceased. While the Court might imply into the payment obligation a reasonable period of time for the payments to commence, a “reasonable” interruption in the payment of the salary, considered in the context of the specific payment obligation in clause 11, could only be a matter of months and not years. Any delay greater than a number of months would be clearly unreasonable, and inconsistent with the obligation on Angela to “ensure” that fortnightly salary payments continue to be paid.”
“[32] Ordinarily, a gift on trust to persons for their life would include the use of that property. In the context of shares in a private company, this would include a right to receive dividends, if declared, or other income produced by the shares.
[33] At the same time, the overarching intent of the gift to Angela of the remainder interest is that she would end up with ultimate ownership of the shares, but upon the eventual deaths of Peter and Maria and only upon meeting the conditions attaching thereto. By seeking to ‘ensure’ that Angela would be able to meet the condition, the testator sought to create a mechanism whereby she would be able to control both Providential and Sequoyah and, by practical extension Broadlex, diverting retained earnings from the business to help pay the annuity to Peter and Maria.
[34] In this regard, sub-paragraph (a) is a condition precedent to the receipt by Angela of the beneficial interest in the shares. It deals with ensuring the payment of $300,000 per annum. However, further to this, sub-paragraph (a)(ii) deals with similarly ‘ensuring’ that such payment can be paid as a dividend out of Sequoyah.
[35] The use of the word ‘ensuring’ imparts an imperative flavour as part of the trust obligation and the overall condition to be performed.
[36] Angela could only be in a position to seek to ensure that the payments could be made in this form (i.e. by way of dividend) if she were the registered holder of the shares. Without the actual transfer to her of the Sequoyah shares upon George’s death, she would have neither the control to become the director of the company nor the ability to declare dividends in the name of the company.
[37] In both a practical and legal sense, Angela could not hold the shares on trust for Peter and Maria, nor could she ensure that dividends could potentially be declared, and paid, to them for their lifetimes without the shares first being transferred into her name.”
This submission is not persuasive on the proper construction of clause 11 for several reasons. First, the obligation in clause 11(a) upon Angela that she “shall ensure” is not expressly qualified in the manner suggested. Secondly, the simple imperative of “shall ensure” in clause 11(a) combined with the requirement in clause 11(c) for Angela to be “fully complying” with clause 11(a), makes an additional implied condition of this type unlikely. Thirdly, the Court’s above analysis of clause 11 shows that clause 11(a) does not require the payment of the annuity to come out of the Broadlex Group or out of Sequoyah, so an implication that Angela’s obligation is subject to gaining full legal control of the Broadlex Group or Sequoyah is not indicated.
But even if such a qualification to Angela’s obligation to “ensure” were established on the proper construction of clause 11, there is also a practical reason why this argument would not have been compelling. Angela did not have to withhold payment of the annuity. And any connection between her getting legal title to the Sequoyah shares and her enabling the annuity is tenuous. The probabilities are that she used the annuity as a bargaining chip. It is very difficult to conceive if at any time during the lengthy negotiations – without seeking any quid pro quo – Angela had simply said to the legal personal representative of George’s estate that she wanted to ensure that the annuity was paid to George and Maria from Broadlex Group, that George’s estate would not have voted the Sequoyah shares to support such a resolution and obtain the benefit for Peter and Maria, whether the Sequoyah shares were transferred into in Angela’s name or not.
Finally, Mr Bilinsky on behalf of Angela’s estate has sought to support his case by drawing upon upon equitable principles developed with respect to gifts and equitable obligations created inter vivos*.* Mr Bilinsky noted the disinclination of courts of Equity to construe conditional gifts creating personal obligations as being subject to forfeiture, where they can otherwise be policed by a decree of specific performance, injunction or an order for equitable compensation: cf In re Williams; Williams v Williams [1897] 2 Ch 12, at 19 per Lindley L.J and Young J in Kauter v Kaute**r at [54]. Mr Bilinsky submitted that these principles can be applied by analogy here. He points to Brennan J’s explanation in Muschinski v Dodds (1984) 160 CLR 583, at 605-6, that a condition annexed to a gift may be of either of two kinds (a) a condition involving a forfeiture for non-fulfilment, or (b) a condition creating merely a personal obligation to fulfil it.
As to (a), whether the condition is such that its non-fulfilment involves forfeiture of the property given, depends upon the intention of the donor communicated to the donee at the time when the donee accepts the property: Muschinski v Dodds at 606.
As to (b), a donee who accepts a gift creating merely a personal obligation of fulfilment, incurs an equitable obligation to perform the condition: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 418 – 419. A condition which creates a personal obligation may upon acceptance of the gift be enforced in equity by an order for compensation or where appropriate even by decree of specific performance: Muschinski v Dodds at 606. Mr Bilinsky submits that clause 11 should be construed as such a gift, which could be fulfilled now and that to do justice upon acceptance of the gift by Angela’s estate it would be appropriate for equity to order compensation to Peter and to Maria’s estate.
But this reasoning is not persuasive. Even with gifts inter vivos much depends upon the ascertaining the intention of the donor communicated to the donee at the time when the donee accepts the property. Here as the Court has explained above, the logic of clause 11. George wanted to bring about a very specific testamentary scheme that supported the priority objects of his testamentary bounty, his siblings, and after that to give that business to Angela, once she had proved she had earned it through that support. This scheme is sufficiently specific that argument from general caselaw about conditional gifts is unhelpful.
The five questions raised in the Summons may be answered as follows, based on the Court’s above analysis.
The administrator of George’s estate, Mr Glass, is not required to transfer the deceased’s shares in Sequoyah to Angela’s legal personal representative, Mr Evans, regardless of whether he provides an undertaking that he will make or procure the payments referred to in clause 11(a).
The remainder interest in the shares falls into the residue of the deceased’s estate in the events which have occurred.
Peter still holds a life interest in the Sequoyah shares and is therefore entitled to payment of $300,000 per annum, and he would be entitled to any dividends declared on those shares, but he has no entitlement to the declaration of a dividend from Broadlex.
Because Angela pre-deceased Peter and the shares have not already been transferred to Angela, on Peter’s death the shares will form part of the residue of George’s estate.
Two questions posed by Mr Evans, the legal personal representative of Angela’s estate on the First Cross-Summons may be answered as follows.
No order will be made immediately requiring Mr Glass to transfer the shares in Sequoyah to the administrator of Angela’s estate to hold on trust for Peter. But the administrator of Angela’s estate may wish to be heard on the next question – the appointment of a new trustee of the clause 11 trust, a matter discussed in the next section of these reasons.
The Court will consider after hearing further submissions from the parties what appointment the Court should make either under Trustee Act, s 70 by way of the appointment of a new trustee, or under clause 24(j) of the will which gives George’s executors powers additional to Trustee Act, s 70 to appoint “different persons…to be trustees of any one or more of the Trust Funds” created by the will. Some of the considerations relevant to that issue are discussed below.
As to the two questions raised on Peter’s Second Cross-Summons, the Court will declare that:
Since the date of the deceased’s death Peter has been and will be entitled during his lifetime to a beneficial interest in the Sequoyah shares; and
On Peter’s death the Sequoyah shares will form part of the residue of the deceased’s estate.
The parties are at issue as to who should be appointed trustee of the clause 11 trust. The parties are encouraged to agree upon the appointment under Trustee Act, s 70, or under clause 24(j) of a new trustee and the Court will determine that issue if it remains in dispute.
Peter contends that on the failure of the clause 11 conditional gift, Angela’s estate should not be the trustee of his interest as a life tenant in the Sequoyah shares, as she has no prospective interest in remainder in the shares. Peter submits there is a risk that the testator’s intention of benefiting Peter during his lifetime will be subverted if the legal personal representative Angela’s estate is to be the trustee. Peter offers for himself to be appointed instead as the trustee.
Angela’s estate initially contended that Peter could not be the trustee as that would involve a merger of his legal and equitable estates. But that is not correct, as Peter would only have an equitable life estate with the remainder being applied to George’s residuary beneficiaries under clause 21 of his will.
Angela’s estate contends that the trustee of the clause 11 trust should not be Peter. This submission is not surprising given the failed negotiations between Peter and Angela, which has left residual opposition to the idea of Peter being the decision-maker controlling the Sequoyah shares with whom Angela’s estate, which controls the shares in Providential, will have to deal in relation to the future management of the Broadlex Group.
If the Court is called upon to make this decision, prominent considerations in the choice of trustee will be making an appointment which best preserves both Peter’s life interest and the value of the interest in remainder in the Sequoyah shares and promotes a good working relationship between the holders of the Sequoyah shares and the Providential shares and the resolution of any outstanding issues between them.
The parties will either need to agree upon costs or address the Court on the question of costs. There were genuine difficulties of construction of clause 11 arising from its drafting structure and the parties debated the issue from reasonable positions that were open to being supported in argument. The Court will order that Mr Glass’s costs of these proceedings be paid out of the estate on the indemnity basis. There is some justification for Peter’s and Angela’s costs also to be paid out of George’s estate as well on the ordinary basis but if that cannot be agreed the Court will hear submissions on the question of costs.
For these reasons the Court makes the following declarations and orders:
DECLARE that
(a) since the death of George Tsivis (“the deceased”) the Second Cross Claimant, Peter Tsivis is entitled during his lifetime to a beneficial interest in the whole of the share capital of Sequoyah Investments Pty Ltd (“the Sequoyah shares”), and (b) on the death the Second Cross Claimant the Sequoyah shares will form part of the residue of the deceased’s estate.
(a) the appointment of a trustee for the Sequoyah shares, and (b) payment of the costs of the First Cross-Summons and the Second Cross-Summons.
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Glass
Tsivis
(1945) 73 CLR 404
(1932) 47 CLR 417
(2020) 104 NSWLR 155
(1922) 31 CLR 268
(1939) 62 CLR 242
(1955) 94 CLR 70
(1986) 6 NSWLR 60
(1984) 160 CLR 583
(1905) 7 CLR 569
(1915) 20 CLR 557
(1971) 2 NSWLR 494