Perpetual Trustee Company (Limited) v Tindal [1940] HCA 14

Perpetual Trustee Company (Limited) v Tindal [1940] HCA 14 - HCA 1940 case summary — Zoe

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the representative of a deceased child should take) "it is necessary to bear in mind what has now become an elementary principle in the doctrine of powers, although at one time it was disputed, and indeed held the other way - I mean the principle that the existence of a power of appointment does not prevent the vesting of the property until, and in default of, execution of the power. The exercise of the power will divest the estate ; but until the power is exercised it remains vested in those who are to take in default of appointment. That is now perfectly well settled, and has been so ever since the well-known case of Doe d. Willis v. Martin (1). But where the instrument contains no express gift over in default of appointment, the difficulty is to determine who are to take in default of appointment. The general principle seems to be this : If the instrument itself gives the property to a class, but gives a power to A to appoint in what shares and in what manner the members of that class shall take, the property vests, until the power is exercised, in all the members of the class, and they will all take in default of appointment ; but if the instrument does not contain a gift of the property to any class, but only a power to A to give it, as he may think fit, among the members of that class, those only can take in default of appointment who might have taken under an exercise of the power. In that case the court implies an intention to give the property in default of appointment to those only to whom the donee of the power might give it" (2). In Lambert v. Thwaites (3) the gift fell within the first part of this proposition as, in my opinion, it does in the present case. If so, then in this case, as in the cases cited, all the " other" children had interests in the policy (subject to the preceding interests), but they were liable to be deprived of those interests by the exercise of the power. The power not having been exercised, the representatives of the two " other" deceased children are entitled to their shares.

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Life, Fire and Marine Insurance Act 1902 No. 49, (N.S.W.). Secs. 8 and 9 of this statute first appeared in the Married Women's Property Act (N.S.W.), 42 Vict. No. 11, adapted from the English Act 33 & 34 Vict. c. 93, sec. 10. By a later enactment (56 Vict. No. 11), sec. 14 (now sec. 10) was introduced. This section has no counterpart in similar English legislation. The New-South-Wales legislation was consolidated by the Act No. 49 of 1902, the relevant sections of which for the present purpose are secs. 8 and 10. When the policies in question were taken out by the deceased trusts were created, and one turns to the policies to see who are the beneficiaries named and what interests they take in the policy moneys. In the first policy, that of the National Mutual Life Association of Australasia Ltd., under the heading " Special Con- ditions required if any" appear the words creating the trust - " Beneficiary my wife if she shall survive me - if she shall predecease me - my son Charles Henry Tindal." In the events which happened, both his wife and son predeceased the assured. The learned primary judge held, and I think rightly, that on the death of the assured's wife his son Charles took an absolute interest in the policy moneys, which passed to his personal representative. This conclusion is justified by the decision in Cousins v. Sun Life Assurance Society (1), which I think we should follow. That decision shows that no implication arises from the statute importing the idea of survival into limitations expressed in such policies. In a will the limitation to Charles Henry Tindal would be construed as depending on one contingency only, viz., the wife's predeceasing the assured. Other- wise it would be treated as a gift in his favour absolutely devolving on his personal representatives in the case of his death before the period of actual enjoyment. There is no reason for giving the limitation any different effect in the policy. The relevant words of the second policy are as follows : - '' Beneficiary. The amount of assurance and all bonuses and additions thereto shall be for the benefit of the wife and children of the assured in terms of the proposal (1) (1933) Ch, 126.

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moneys secured by the policy would enure for the benefit of the

wife for life and after her death for the children of the assured existing at or after the date of the policy. There are, however, particular provisions expressed in the policy in favour of the wife of the assured if she shall become his widow and failing that to his son Charles in an event which did not happen " or to such other children of the assured as the assured may by way of substitution appoint." These particular provisions if they had become operative would have displaced the application of sec. 10 but as they have completely failed room appears to me to be left for the application of sec. 10. I see no reason why trusts which have no operation in the events occurring should entirely displace the application of that section, the purpose of which was to fill the very kind of gap which is left by an inadequate or incomplete expression on the part of the assured. None of these particular provisions became operative unless it can be said that a trust was created by the direction that if the son Charles should not take the policy moneys they should be payable "to such other children of the assured as the assured may by way of substitution appoint." Under an instrument in which, if such a provision were not regarded as operative, no trusts would be created at all, it may well be that the presumable intention of the settlor would be best effected by treating such words, although facultative only in form, as supplying sufficient indication of inten- tion to create a trust in default of appointment. Where, however, as here, the settlor has himself resorted to a form of disposition which itself supplies the trusts which are to be operative in default of any express provision, there is neither justification nor reason for constructing a trust out of such a power. For these reasons the trusts having failed and the power not having been exercised - the court, of course, cannot execute the power nor substitute or select the favoured children - the statutory trust in favour of the wife for life with remainder to the children in equal shares became operative. The wife having died, it follows that the proceeds of the second policy belonged to all the children of the assured, including Charles. It is unnecessary to state in detail the result of the English and Irish cases, but I have examined them. Professor Gray, in an interesting and learned article in the Law Times Journal, vol. 132, pp.

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Caroline Edith Tindal did not become her husband's widow, so she does not take, and as Charles Henry survived neither of them I think that it is clear that within the meaning of the bracketed words he did not survive and cannot take. To become entitled he must survive his parents and attain full age. The testator did not exercise the power of appointment reserved to him by the remaining words of the provision. But the question is whether, in default of appointment, the provisions contain an implication of a gift to the objects of the power and if so whether survival of the testator is a necessary condition of taking under the implied gift. Where a special power of appointment in favour of a class is given for the purpose of benefiting the objects of the power and there is no gift over in default of appointment, the failure of the donee to exercise the power does not necessarily defeat the expectations of those qualified to take under an appointment. Prima facie an implication is made by which the objects of the power take, in equal shares, the estate or interest which might have been appointed among them. It is of course a question of intention, but the implication will be made if, from the nature or terms of the power or the circumstances, it appears that the settlor or testator meant that it should be incum- bent upon the donee to exercise the power confided to him or that the objects should take even if he did not. The court cannot compel the execution of a power of appointment by a donee nor execute it in his stead. "It is an immutable rile, that a non-execution shall never be aided" (Sugden on Powers, 7th ed. (1845), vol. 2, p. 157, sec. VL, par. 1). But where the power is entrusted to the donee for the purpose of effectuating an intention that the property should devolve upon the objects of the power or some of them according to the donee's discretion, the latter's neglect to exercise the power cannot be allowed to defeat the purpose, which will be carried into effect by the implication of an estate or interest in equal shares among those capable of taking by appointment. Lord Hatherley was able to say simply, that it was settled that where there is a power to

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the power to substitute other children is confined to substitution upon or in case of the death of Charles Henry and was not intended to allow the testator to displace Charles Henry though surviving and attaining twenty-one. The primary purpose of the assured was, - I think, to provide for his wife if she survived him. If she did not survive him, his next wish was that his son Charles Henry should - receive the policy moneys, provided that he attained twenty- one and survived. But lest Charles Henry also should pre- - decease him or should fail to attain full age, he reserved a power to appoint another child or other children in his place. Only in the event of Charles Henry failing to qualify as the payee of the - policy moneys, did the assured mean that a substitute should be appointed. It is true that the sub-clause naming Charles Henry as the person to whom the policy moneys should be payable and ' reserving the power of appointing a child or children by way of substitution is expressed as an alternative. But the alternative intended is dependent not on the making of an appointment but a on the failure of the limitation to Charles Henry contained in the first limb of the clause. The result is that the power of appointment has the same meaning and effect as if it ran: " Or if Charles Henry Tindal does not survive and attain twenty-one, to such other children of the assured as the assured may by way of substitution appoint." Only upon the footing that the power has this meaning is it possible to say that it implies or amounts to a trust. For if it means that the assured might displace Charles Henry by substituting another child or other children notwithstanding that Charles Henry fulfilled the condition of surviving and attaining twenty-one, then it would confer a discretionary power to defeat the interest which, upon his _ mother's death, would vest in Charles Henry. A power authorizing the donee to prefer another person as beneficiary in place of the beneficiary named is one which there could be no duty to exercise. It is not a power in the nature of a trust.

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Judgment (265 paragraphs)

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