Kinsela v Caldwell

This appeal was originally argued before a Bench on which the late Sir Douglas Menzies presided; he died before judgment was delivered and the appeal has now been re-argued.

At the original hearing of the appeal the wife and children of the appellant, who had been served with the notice of appeal and who were represented, were, without objection, added as respondents in order that they should be bound by any order that the Court might make.

At that hearing an application by the appellant to add to his notice of appeal was granted in part, but the Court refused to permit the following addition, viz.:

1. That his Honour should have held that the transfer by the appellant to the respondents of the shares referred to in the said deed was made by the appellant as security only and that upon repayment by the appellant of the sum secured thereby the appellant was entitled to have the said shares transferred back to him notwithstanding any provisions of the said deed to the contrary.

The issue, which this addition was intended to raise, was not before the Supreme Court and it seemed to the Court that in any event it might involve some question of fact. The refusal to allow it to be raised in this appeal was made without prejudice to any right that the appellant might have to obtain a determination of the issue by further proceedings in the Supreme Court.

The appellant's claim could not succeed without destroying the operation of cl. 4 (d) of the deed of trust, namely:

If on the vesting day none of the named beneficiaries is living, the Trustees shall on that day pay and assign the capital and any undistributed income of the Trust to the next-of-kin of the Shareholder in the shares and proportions to which they would be entitled under the laws relating to intestate succession then in force if the Shareholder had died on the vesting day. This it was sought to do by the arguments, (1) that the clause is void for uncertainty, and (2) that it is void by reason of s. 29B of the Conveyancing Act, 1919 N.S.W..

To understand cl. 4 (d) it is necessary to refer to certain definitions to be found in the deed. "The vesting day" is 1st January 1984; "the named beneficiaries" are not actually named but the phrase means:

the shareholder, the lawful wife from time to time or the widow of the Shareholder and the sons and daughters and any remoter issue of the Shareholder. The shareholder is the settlor; the "next-of-kin of the Shareholder" means: that person or those persons who would if the Shareholder died intestate on the first day of January, 1984 be entitled to a beneficial interest in the Estate of the Testator according to the laws relating to intestate succession then in force. The "Testator" referred to in the foregoing description of next-of-kin means: "the late Charles Henry William Kinsela, the deceased Father of the Shareholder". It follows, of course, that the "Testator" was dead at the time of the making of the deed of trust.

It was contended that cl. 4 (d) was uncertain because (1) it could not be known before 1st January 1984 to whom the shares, with any undistributed income, were to be assigned; (2) that in the case of a person who had already died leaving a will and being called the "Testator" it was meaningless to refer to those persons who "would be entitled under the laws relating to intestate succession"; and (3) that although he was dead when the deed was made the domicile of the "Testator" was not stated so that it was not known what law would determine who would on 1st January 1984 be his next-of-kin.

In our opinion all these contentions fail. A trust is not uncertain merely because the actual persons to whom the distribution will be made cannot be known in advance of the date of distribution; it is sufficient that the provisions of the trust ensure that upon that date the beneficiaries can be ascertained with certainty. Mahoney J. so held, and we would, with respect, adopt as our own the reasons he gave for this conclusion. Here in 1964 the whole range of objects eligible for selection was made capable of ascertainment at the date of distribution. The possibility that there will be no such object in 1984 or that then there will be no New South Wales law relating to intestate succession does not invalidate the trust: see Re Hain's Settlement [6] . Furthermore, there is no objection to a trust naming an artificial class of next-of-kin as beneficiaries, provided that the persons within that artificial class can be ascertained at the date of distribution within the perpetuity period. The objection relating to the domicile of the "Testator" as if he were to have died on 1st January 1984, is answered by recalling that he was dead when the deed was made and it is hardly necessary to speculate about changes in domicile had he lived until 1st January 1984. Furthermore, it was probably common ground when the settlor made the deed that the testator had died domiciled in the State of New South Wales. It is to be observed that it is not the actual next-of-kin of the testator according to the law in force on 1st January 1984 that are the beneficiaries; it is those of his next-of-kin determined by the law of New South Wales as if the shareholder had himself died intestate on that day domiciled, as we would read the deed of trust, in New South Wales.

Finally, it is no objection to a trust which describes a class that difficulty may arise at a future date in determining whether or not a particular person is within the description of the class. Courts, for instance, frequently ascertain, albeit with difficulty, who were the next-of-kin of a person long since dead and who are presently entitled to what those next-of-kin became entitled to long ago. (See Supreme Court Rules 1970 N.S.W. Pt 49, Div. 2 and Pt 68: Halsbury's Laws of England, 3rd ed., vol. 16, pp. 435, 444, 448.)

As Mahoney J. correctly decided, the attack upon cl. 4 (d) on the grounds of uncertainty cannot succeed. Those to whom the trustee will be bound to assign the trust property on 1st January 1984 will at that date be ascertainable with complete certainty according to the law of New South Wales relating to intestate succession then in force whatever has happened, or may happen, to the family of the testator.

Furthermore, in our opinion, s. 29B of the Conveyancing Act, 1919 N.S.W. has no application whatever to cl. 4 (d). The clause does not contain any limitation over at all; it merely provides for a distribution among an ascertainable class of persons without any limitation. Furthermore, the class makes no reference to any "issue" of the "Testator", "the Shareholder" or indeed of any person at all. "The named beneficiaries" are not the issue of the shareholder although such issue are included; the "next-of-kin of the shareholder" may or may not be the issue of the "Shareholder" or the "Testator". Indeed we find nothing in cl. 4 (d) that can possibly attract the operation of s. 29B and Mahoney J. was correct in deciding that nothing in the clause is void or incapable of taking effect by virtue of that section.

Accordingly, in our opinion, the appeal should be dismissed.