Playoust v Hornsby & Ors [2005] VSCA 73

"On the assumption that the Trustees of the estate restructure the Sweeps business in terms of the restructure proposal by the sale of the assets of the Sweeps business to Tattersalls Ltd and the issue of the shares in Tattersalls Ltd to the Trustees, to what persons and in what proportions should the Trustees distribute those shares?"

"In my view the proper interpretation of [the will] is that ... the consideration received for the sale or transfer of the Sweeps business is to be held on the trusts 'hereinbefore [in the will] declared', namely: as to income therefrom, mutatis mutandis, on the trusts as to net profits contained both in clause T (via clauses Z, CC and FF) and in clause Y, and as to the capital or corpus thereof, again mutatis mutandis, on the trust for division of the proceeds of sale contained in clause DD. In other words, so far as the Sweeps business is concerned, clause NN incorporates, mutatis mutandis, the express trusts as to net profits and corpus respectively created elsewhere in the will in relation to that business."

13 The appellant contends that the judge's answer was wrong in part. He submits that while the judge was right to conclude that the proceeds of realisation should be held as to income "on the trusts as to net profits contained in clause T (via clauses Z, CC and FF) and in clause Y", the judge erred in holding that the capital or corpus should be held on the trust for division of the proceeds of sale contained in clause DD. The appellant argues that the capital or corpus, like profits, must be held on trust for the beneficiaries entitled to the profits.

The scheme of the will

14 As has already been noticed, the estate originally comprised a number of assets and businesses as well as the Sweeps business. But whereas the will provided in general terms for the conduct and sale of all of the other assets and businesses, it provided in specific and different terms for the continuation and realisation of the Sweeps business.

15 Thus, as to the other assets and businesses, by clause B of the Will the testator left all his real and personal property outside Tasmania to the trustees on trust "with full power (under clause C) to carry on the several businesses thereon" and therefrom (under clause D) to pay a number of annuities or yearly sums of money to a range of specified beneficiaries and, subject to the payment of those amounts and the satisfaction of any mortgages charges and other encumbrances, to pay the net profits annually (under clause E) by way of the annuities and other provisions therein provided and (under clause F) to stand possessed of any of the profits which remained unapplied, in favour of a class of objects which were defined (in clause Q) as "Charities". Similarly, in clause S, the testator bequeathed all his real estate and all the residue of his personal estate in Tasmania, except the Sweeps business, to the trustees and, in clause T, the testator provided that the trustees should stand possessed of all that property to be divided between a range of identified beneficiaries in specified shares.

16 Contrastingly, as to the Sweeps business, by clause U the testator declared that he was desirous of the trustees continuing to carry on the Sweeps business under the name or style of "Tattersall Sweep Consultation care of George Adams," and he "authorised and empowered" the trustees to apply for and obtain the necessary permission to carry on and conduct the business under the licence which he had held at his death and any renewal of the licence or fresh licence which might be necessary for the purpose, and by clause X he "authorised and empowered" the trustees to carry on and continue the Sweeps business in and outside Tasmania as theretofore carried on "with the fullest most complete and most absolute powers in all respects as if they were the sole owners thereof." The testator further provided in clause Y that the trustees should "stand possessed of the net profits which may arise from the carrying on and continuance of [the Sweeps business]"and pay the same as to eight tenths to a range of specified beneficiaries in specified proportions (and in the event of any of them dying in the testator's lifetime, to pay that beneficiary's share to his widow for her life) and as to one tenth to the employees for the time being of the business in such shares and proportions as the trustees should determine and, finally, in clause Z, the testator directed that the trustees should hold the remaining one tenth upon trust to accumulate and apply for the benefit of the so-called Charities.

17 So far as the sale and disposition of the other assets and businesses were concerned, the testator provided (in clause K) that the trustees should have full power as absolute owners to "sell and dispose" of the real and personal property outside Tasmania and (in clause L) that they should stand possessed of the net proceeds of "such sale and disposition" upon trust to be applied in the first place to pay moneys due in respect of the Sweeps business and thereafter (under clauses N and O) in payment of obligations owing in respect of debts outside Tasmania and the purchase of land in Sydney and in carrying on one of the businesses other than the Sweeps business in Sydney and (under clause P) that the trustees should stand possessed of the residue of the net proceeds of "sale and disposition" on trust for the so-called Charities.

18 Contrastingly, in the case of the Sweeps business, the testator eschewed the possibility of any "sale and disposition," and provided only for a power of "winding up and realisation" in the event that the trustees were unable or unwilling to continue to carry it on. In clauses DD, EE and FF[19] the testator directed that:

"[DD.] IN THE EVENT of my Trustees being unable to continue or deciding to discontinue the carrying on of my said [Sweeps business] THEN I AUTHORISE EMPOWER AND DIRECT my Trustees to wind up the said [Sweeps business] and to realise my [Sweeps business] AND I DIRECT my Trustees to stand possessed of the net proceeds of such winding up and realisation including all moneys which may have accumulated in their hands under the trust in that behalf hereinbefore contained or so much of such accumulations as shall not have been used or distributed as aforesaid but after payment of all debts liabilities and prizes in connection therewith UPON TRUST to divide the same between and amongst the before named Legatees of the net profits[20] of the said [Sweeps business] in the same proportions as they are hereinbefore directed to divide between them the said net profits. [EE.] BUT I DECLARE that nothing hereinbefore contained shall authorise or empower my Trustees to sell my said [Sweeps business] or to permit any other person or persons or body corporate (except as hereinafter is specially provided) to use or employ my name or the style or name under which I have carried on the said [Sweeps business] in connection therewith or with any business of a like kind or nature the bequest to my Trustees of the said [Sweeps business] with the power to carry the same on in my name being in the nature of a solemn trust imposed by me on them on account of the confidence I have in their carrying the said [Sweeps business] on in the same way I have carried it on. [FF.] AND I DECLARE that the shares of any of the before named Legatees of my said [Sweeps business] either in the net profits thereof or in the net proceeds of such winding up and realisation as aforesaid and in all moneys which may have accumulated as aforesaid which shall fall in or lapse owing to the death of such Legatees in my lifetime or owing to the death of his Widow should he leave one as aforesaid or owing to any one or more of the said Legatees renouncing or disclaiming the Legacy hereby bequeathed to him or them respectively shall be held by my Trustees UPON AND SUBJECT to the trusts directions and provisions hereinbefore contained in favour of [so-called] Charities."[21]

19 But the testator then made common provision for the possibility of converting to a company "any one or more of the businesses which [he] may be carrying on or engaged in at [his] decease".[22] Clause NN provided:

"NN. AND I AUTHORISE AND EMPOWER my Trustees with the full absolute and uncontrolled powers and discretions of owners at any time or times to convert or join in converting any one or more of the businesses which I may be carrying on or engaged in at my decease into a Company or separate Companies limited by shares in such manner as may be thought fit AND to promote or assist in promoting a Company or Companies for the purpose of taking over any one or more of the said businesses at the expense of that portion of my Estate which may be in the particular State or part of the world in which such business or businesses is or are being carried on for the time being AND I DECLARE that my Trustees may sell or transfer any one or more of the said businesses and the property assets and capital respectively embarked therein and the goodwill thereof or any part or parts thereof respectively to such Company or Companies or to any Company or Companies having for its or their objects or one of its or their objects the purchase of a business or businesses of a like nature in consideration wholly or in part of ordinary shares therein wholly or partially paid up or wholly or in part of debentures debenture stock or bonds or preference shares of such Company or Companies AND as to the balance in cash payable immediately or by any instalments with or without security and my Trustees or any of them may act as Directors Manager or Secretary of or hold any other office in relation to such Company or Companies without being accountable for any remuneration received by them or him as such and may enter into any such other arrangements as to any such Company or Companies as aforesaid or as to the sale or transfer of the said business or businesses and the assets thereof respectively to the Company or Companies so formed or otherwise whether before or after the incorporation of the said Company or Companies as my Trustees in their absolute and uncontrolled discretion shall think fit AND so that all contracts or arrangements which may be made or entered into by my Trustees for any of the purposes aforesaid shall be valid and effectual notwithstanding that any of my Trustees may be Promoters of the Company or Companies or intended Company or Companies or may be interested or concerned therein or intended so to be as Shareholder Directors Managers Secretaries or in any other character or capacity AND I FURTHER DECLARE that the sale or transfer of any one or more of the said businesses and the assets thereof respectively to the said Company or Companies may if deemed necessary or expedient be effectuated by my Executors in that character in which case they shall have all such and the like powers and authorities in relation thereto are as hereinbefore given to my Trustees AND I FURTHER DECLARE that all shares bonds debentures debenture stock and moneys which may be received as the consideration for the sale and transfer of any one or more of the said businesses and the assets thereof respectively or any part thereof to such Company or Companies as aforesaid shall be vested in and held by my Trustees UPON AND SUBJECT to the trusts directions and provisions hereinbefore declared and contained of and concerning the business or businesses and assets thereof so as aforesaid to be sold and transferred to any such Company or Companies as aforesaid or the proceeds of sale and disposition of any such business or businesses and the assets thereof respectively."[23]

The meaning of clause NN

20 Clause NN is in a number of respects a puzzling provision. The generality of its terms appears aimed at the businesses other than the Sweeps business and, given the pattern of the earlier provisions of the will, it might be thought that the clause would be confined to those other businesses. But it is the only clause following clause EE that is capable of being the qualification: "(except as hereinafter is specially provided)" and, consequently, we take it to apply also to the Sweeps business. Its purpose, however, is less than clear. In as much as it applies to the businesses other than the Sweeps business, it adds little to the powers of sale and management elsewhere conferred on the trustees (except perhaps a power to sell to or deal with a company in which the trustees may be interested or concerned as shareholders, directors, managers or secretaries or in any other character or capacity). In as much as it applies to the Sweeps business, it seems to gainsay the very prohibition that clause EE imposes: against permitting the Sweeps business to be conducted under the Tattersalls name by someone other than the trustees. If clause NN is construed in accordance with the plain and ordinary meaning of its terms, the "sale or transfer" of the Sweeps business "and the goodwill thereof" to a "Company" "in consideration wholly...of debentures debenture stock or bonds ... and the balance in cash" could well result in the sale of the Sweeps business and the Tattersalls name to a "body corporate" over which the trustees have no control.

21 Yet as has been seen, the power of sale and disposition conferred by clause K does not apply to the Sweeps business, and clause EE expressly provides that the power of winding up and realisation conferred by clause DD does not authorise or empower the trustees to sell the Sweeps business or permit any other person or body corporate to use the testator's name or style "except as hereinafter is specially provided". Moreover, and more fundamentally, the bequest to the trustees of the Sweeps business with the power to carry it on in the testator's name is declared to be "in the nature of a solemn trust" imposed by the testator on the trustees on account of the confidence he had in their carrying on the Sweeps business in the same way he had carried it on. A further consideration is that the exception from clause EE of what "hereinafter is specially provided" applies in terms only to the prohibition upon permitting any other person or persons or body corporate to use or employ the Tattersalls name in connection with the Sweeps business or with any business of a like kind or nature, and not to the prohibition upon sale of the Sweeps business as a going concern. The fact that the testator expressly subjected the former prohibition, but not the latter, to the operation of clause NN might be taken as an indication that the latter was to prevail over clause NN.[24]

22 We have referred already to the conversion of the Sweeps business into corporate form some years ago. We have noticed that it involved the transfer of the Sweeps business and related businesses to a number of private companies with all of the shares in those companies being held by Tattersalls Pty Ltd and all of the shares in Tattersalls Pty Ltd being held by the trustees on trust to pay the income therefrom to the beneficiaries named in clause Y. There is no reason to doubt that that exercise was within the powers of corporatisation conferred by clause NN. It resulted in the trustees retaining total control over the Sweeps business and the use of the Tattersalls name; albeit through corporate vehicles.[25] But the "restructure" which is now proposed is of a different kind. If implemented, control of the Sweeps business and the Tattersalls name would pass from the trustees to a listed public company over which the trustees would not necessarily have any control. The result in effect would be the very sort of thing that the "solemn trust" and restrictions mentioned in clause EE appear calculated to prevent.

23 In these circumstance is one to conclude that the testator intended by clause NN to override clause EE to the extent of enabling the trustees to hand control of the Sweeps business and the Tattersalls name to a stranger by means of a corporate transfer? Or, given the importance which the testator placed on the trustees retaining control of the Sweeps business and Tattersalls name, is the better view that clause NN operates subject in some fashion to the "solemn trust" and restrictions imposed by clause EE?

24 Despite our inclination to construe clause NN as subject to the "solemn trust" declared in clause EE, we have concluded that it is not so subject. To begin with it is impossible so to restrict it without reading in words which are not there.[26] As the judge below observed, the clause provides for the sale and transfer of a business to a company in consideration of shares or debentures or debenture stock, and in the context in which the word "or" there appears it cannot be read as "and." Hence it seems that the testator envisaged the possibility of a sale for debentures or debenture stock alone, and therefore situations where the retention of control through shareholding would not be possible. In order to restrict the operation of the clause to cases in which the trustees retain control by means other than shareholding, one would have to read in a proviso to the effect that "nothing contained in the clause allows the trustees to part with control of the corporation into which the business is sold". Relatively speaking that would be a great many words to read into a provision of this kind.

25 Additionally, as has been seen, Clause NN applies to the other businesses as well as to the Sweeps business, and there is no reason to restrict its operation in relation to the other businesses. Clause K gives the trustees an unqualified power of sale and disposition over the other businesses. The implication is that the power in clause NN to corporatise those other businesses should be equally unrestricted. So therefore, in order to restrict its operation in its application to the Sweeps business, it would be necessary to read in not only words of proviso of the kind already mentioned but also further words to limit the proviso to the Sweeps business.

26 Furthermore, there is the express exception from clause EE of that which "hereinafter is specially provided," and in the way in which the will is drafted that can only mean what is provided for in clause NN. Remember that the clause EE restriction on allowing another person to use the Tattersalls name is directed to arrangements arising out of the winding up and realisation of the Sweeps business under clause DD, and so to circumstances in which the trustees are unable to continue or decide to discontinue the business. It must be assumed therefore that the exception of what is provided for in clause NN is directed to similar circumstances. Putting it another way, the exception contemplates and therefore implies that an arrangement may be entered into under clause NN in circumstances in which the trustees are unable to continue or decide to discontinue their involvement with the business. That seems so contrary to the idea that clause NN is restricted to cases in which the trustees retain control of the business as to make the idea of such a restriction untenable.

27 In the fourth place, the terms of clause NN are clear whereas the significance of the "solemn trust" mentioned in clause EE is enigmatic. According to ordinary principles of construction, what is clear ought not be read as cut down by what appears to be ambiguous. It is also in accordance with the rule of despair that clause NN as the provision later in the will should prevail over clause EE.[27]

28 We conclude that clause NN is in terms broad enough to accommodate an arrangement of the kind proposed, whereby the assets and undertaking of the Sweeps business and associated businesses are transferred to a listed public company in return for shares, whether or not the shares are such as to confer control of the business on the trustees.

The trusts applicable to the shares

29 That leaves the question of what should be done with the shares. As has been seen clause NN provides that all shares bonds debentures debenture stock and moneys which may be received as the consideration for the sale and transfer of any one or more of the businesses and assets thereof to a company or companies in accordance with the clause "shall be vested in and held by [the trustees] UPON AND SUBJECT to the trusts directions and provisions hereinbefore declared and contained of and concerning the business or businesses and assets thereof so as aforesaid to be sold and transferred to any such Company or Companies as aforesaid or the proceeds of sale and disposition of any such business or businesses and the assets thereof respectively."[28]

30 On a first reading the clause appears to contemplate that the consideration for the sale may be held in one or other of two ways, namely:

• on the trusts and in accordance with the directions and provisions which would have applied to the business if not sold; or

• on the trusts and in accordance with the directions and provisions which would have applied to the proceeds of a sale and disposition of the business.

But it does not say how one chooses which course to follow.

31 On closer analysis, however, it appears to us that the dichotomy established in clause NN reflects the difference between the way in which the Sweeps business is dealt with in the earlier provisions and the way in which the other businesses are dealt with in the earlier provisions. That is to say, the expression "the trusts directions and provisions ... of and concerning the business ... so as aforesaid to be sold" is directed to the earlier provisions of the will relating to the Sweeps business. And the expression "the trusts directions and provisions ... of and concerning ... the proceeds of a sale and disposition" of the business is directed to the earlier provisions of the will concerned with the sale and disposition of the other businesses. Hence, if the Sweeps business is corporatised under clause NN, the consideration will have to be held "on the trusts and in accordance with the directions and provisions which would have applied to the [Sweeps] business [if not sold]", but if one of the other businesses had been corporatised, the consideration would have to have been held "on the trusts and in accordance with the directions and provisions which would have applied to the proceeds of a sale and disposition of that [other] business".

32 The path to that conclusion is not an easy one. But the first step towards understanding why it is so is to look back in the will in order to identify what if any are the "trusts directions and provisions declared and contained of and concerning":

• "the [Sweeps business] so as aforesaid to be sold and transferred"; and

• "the proceeds of sale and disposition of [the Sweeps business] and the assets thereof".

33 The former of those categories is readily identifiable. The trusts, directions and provisions declared and contained of and concerning the Sweeps business are all of those provisions appearing in the will before clause NN which govern the holding of the Sweeps business on trust and the application of the income of it. The most important of those are clauses U, X, Y and Z, to which we have already referred (although we shall need to come back and mention clause T later in these reasons).

34 The latter category is problematic. One possibility, which found favour with the judge below, is that the trusts applicable to the business to be sold would continue to apply where after the sale the trustees remain as trustees involved in the management of the company to which the business is sold, and that the provisions as to disposition and sale would apply if the trustees do not remain involved as trustees in the company. Another possibility, at one time faintly suggested in the appellant's written submissions but later abandoned, is that the trustees have a choice as to whether to hold on the trusts applicable to the business to be sold or the trusts applicable to the proceeds of sale and disposition. A third, which to some extent seems also to have found favour with the judge below, is that the trusts directions and provisions of and concerning the sale and disposition of the Sweeps business should be taken to include clauses Y and T as to so much of the consideration as may be income and clause DD as to so much of the consideration as may be capital.

35 We reject each of those possibilities. The first presents as unlikely. It necessitates reading into clause NN even more words than would be needed to make the power of corporatisation subject to continuing trustee control. The second is improbable. In a will as fastidiously drafted and precisely directed as this one, it is unlikely that the testator intended to leave a large section of beneficial entitlements to the discretion of the trustees. The third proceeds upon an assumption that both legs of the clause NN dichotomy apply to the Sweeps business. We do not think that they do.

36 The process of reasoning which we prefer starts from the premise that only the first leg of the clause NN dichotomy applies to the Sweeps business and only the second to the other businesses. Axiomatically, there are no trusts, directions or provisions declared and contained concerning the proceeds of sale and disposition of the Sweeps business; for as has been seen, the testator did not contemplate that there ever would be a sale and disposition of the Sweeps business. He confined the sale and disposition power to the other businesses because it was his wish (which he expressed in clause U) that the trustees carry on the Sweeps business. The only dealings with the Sweeps business which he contemplated were:

• a winding up and realisation under clause DD - in which event clause DD directed the trustees to hold the proceeds "UPON TRUST to divide the same between and amongst the before named Legatees of the net profits[29] of the said business in the same proportions as they are hereinbefore directed to divide between them the said net profits"; and

• the corporatisation of the business under clause NN - in which event the trustees were directed to hold the consideration on the trusts of and concerning the Sweeps business (which is the first category just mentioned).

37 As we view the matter, any consideration received upon a sale of the Sweeps business under clause NN must be held on the trusts, directions and provisions declared and contained of and concerning the Sweeps business; for there are no other applicable provisions. Contrastingly, in the case of the other businesses, the testator conferred an express power of sale and disposition (in clause K) and expressly provided (in clause L) that the trustees should stand possessed of the proceeds of any such "sale and disposition" upon trust to be applied in the first place to pay moneys due in respect of the Sweeps business and thereafter (under clauses M, N and O) in payment of obligations owing in respect of debts outside Tasmania and the purchase of land in Sydney and in carrying on one of the businesses other than the Sweeps business in Sydney and (under clause P) that the trustees should stand possessed of the residue of the net proceeds of "sale and disposition" on trust for the so-called Charities. Consequently, if one of those other businesses had been sold as part of a corporatisation under clause NN, the consideration received upon the sale would have to have been held "on the trusts and in accordance with the directions and provisions which would have applied to the proceeds of a sale and disposition of that [other] business."

Clause DD does not apply

38 That brings us to the second step of the process, which is to turn back to the "trusts directions and provisions hereinbefore declared and contained of and concerning the [Sweeps business] ... so as aforesaid to be sold and transferred." The question is whether that expression requires the trustees to hold any consideration received upon a sale under clause NN on the trusts provided for in clauses Y and T or for distribution in accordance with clause DD.

39 As has been seen, the testator allowed for the possibility of a corporatisation under clause NN which results in the trustees losing control of the Sweeps business. But he also allowed for and indeed would plainly have preferred a corporatisation under which the trustees retain control of the Sweeps business through one or more corporate vehicles. And in the event of a corporatisation under which the trustees so retain control, it cannot be doubted that the testator would have wished the trustees to retain control of the business on the trusts provided for in clauses Y and T. One need only think of the circumstances which have applied since the first corporatisation some years ago. In our view it is not to be supposed that the trustee intended the shares in Tattersalls Pty Ltd to be sold and the proceeds distributed as upon a winding up and realisation. They have been held on the trusts provided for in clauses Y and T. To that extent we think it is plain that clause DD was not intended to apply and hence that the "trusts directions and provisions hereinbefore declared and contained of and concerning the [the Sweeps business] ... so as aforesaid to be sold and transferred" do not include clause DD.

40 The judge below reached a contrary view. His Honour made the assumption that both legs of the clause NN dichotomy apply to the Sweeps business and reasoned from it that because the provisions for winding up and realisation in clause DD are the only thing that come near to the conception of sale and disposition, clause DD must be intended to apply mutatis mutandis to consideration received on a sale of the business as a going concern. It followed, as his Honour saw it, that so much of the consideration as may be income was to be held on the trusts as to net profits contained in clause T (via clauses Z, CC and FF) and in clause Y, and that so much of the consideration as may be capital was to be held mutatis mutandis on the trust for division of the proceeds of sale contained in clause DD.

41 But even putting aside the question of whether the second leg of the clause NN dichotomy does apply to the Sweeps business, it appears to us that his Honour's analysis faces a number of problems. The first is that consideration received upon a sale under clause NN will ordinarily be received on capital account. Clause NN may be drafted in terms broad enough to accommodate an arrangement under which part of the consideration is received in the form of an annuity or other income steam. But it is far from obvious that that is what was contemplated. Even if it were, it is difficult to see that the testator intended the beneficiaries of the proceeds of sale to depend on the way in which the trustees chose to structure the transaction. The indications are that he intended the beneficiaries to be the same regardless of the structure.

42 Secondly, clause EE expressly provides that nothing in clause DD shall authorise or empower the trustees to sell the Sweeps business as a going concern, but the corporatisation which is proposed does contemplate that the business will be sold as a going concern. His Honour sought to avoid that difficulty by construing clause EE as confined to "circumstances other than those in which the Trustees are unable or unwilling to continue the conduct of the Sweeps business" and by treating the proposal for restructure as a decision by the trustees "to discontinue conduct control and ownership of the Sweeps business". But, in our view, that is incorrect. The operation of Clause DD is expressly predicated upon the trustees being unable to continue or deciding to discontinue the carrying on of the Sweeps business. In terms it has no operation in any other circumstances. And since clause EE is on any view of the matter an exception to what is authorised, or at least a stipulation as to what is not authorised by clause DD, it has to be directed to circumstances in which the trustees are unable to continue or decide to discontinue the carrying on of the Sweeps business.

43 Thirdly, it may be doubted that the proposed restructure should be regarded as a decision by the trustees "to discontinue conduct control and ownership of the Sweeps business". Mr Merralls submitted to this Court that his Honour had wrongly characterised the restructure proposal as a discontinuance of the business, thereby appearing to be at odds with the trustees' intention to continue the business albeit in a different legal form. That view was reinforced by the submissions of Mr. O'Bryan, representing the trustees, who informed the Court that the trustees had no intention of being unable to continue the business nor had they decided to discontinue the business.

44 Fourthly, the judge reasoned that it was necessary to give clause EE a limited interpretation in order avoid what he termed "a substantial negation of the Testator's intention expressed in clause DD". It is apparent that his Honour meant by that expression that "it was the essence of realisation that there be a 'commercial turning to account' or sale" and that "clause EE had to be interpreted to harmonise with clause DD and not to negate it". But if we may say so with great respect, that reasoning is also incorrect. The "essence" of clause DD is provision for winding up and realisation in the event of the trustees "being unable to continue or deciding to discontinue the carrying on of [the Sweeps] business". In the absence of any contrary indication, one (but only one) of many ways in which the business might so be wound up and realised would be by way of sale as a going concern. But then there is a contrary indication in clause EE, the evident purpose and effect of which is to except sale as a going concern from the range of methods that may be used under clause DD to wind up and realise the business. Furthermore, as has been seen, the testator's reason for providing for that exception was because he did not want anyone except the trustees running the Sweeps business.

45 Finally, in case what we have said already is not seen as a complete answer in a case where corporatisation results in the trustees losing control of the Sweeps business, we have considered whether it is possible otherwise to construe clause NN as incorporating or excluding clause DD according to the circumstances of the corporatisation. That is akin to the approach adopted by the judge on the basis of the assumption that both legs of the clause NN dichotomy apply to a corporatisation of the Sweeps business, but it is not dependent upon that assumption. According to such an approach, if a corporatisation resulted in the trustees ceding control of the business, clause DD would apply mutatis mutandis (analogously to the way to which it would apply in a winding up and realisation) but if the corporatisation resulted in the trustees retaining control of the business, clause Y would continue to apply, there being nothing in the nature of a winding up and realisation to which clause DD might attach.

46 The difficulties which would be involved with that approach appear to us to be insurmountable. For example, what would be done if the trustees were to sell off part of the Sweeps business under clause NN in order to fund the continued operation of the remainder of the business? Would the trustees be required to distribute the sale consideration under clause DD despite that they needed the funds to carry on the remainder of the business and the funds were realised solely for that purpose? Equally, who is to say what constitutes "control"? For many purposes, control inheres in a significant minority shareholding. If the trustees entered into a corporatisation that resulted in them holding, say, forty-nine per cent of the shares in a company that carried on the business and had control of the board and, because of the spread of other shareholdings, they were likely to retain control of the board, would it be said that they should retain the shares on the trusts of clause Y or distribute them under clause DD on the basis that they were not majority shareholders? What if any difference would it make if their shareholding were diluted by a rights issue in which they could not or chose not to participate? At what if any point would it be said that they had so much lost control that the shares should be distributed under clause DD? In any event, we would postulate, how can one read into a clause the large amount of words or implications needed to make it operate distributively according to a conception as illusive and variable as control or anything else along those lines when there is nothing in the terms of the clause itself on which to base that construction?

47 In the result we conclude that clause DD does not apply to consideration received upon a sale of the Sweeps business or any part of it under clause NN, whether or not the trustees retain control of the business. All things considered, the intention which we attribute to the testator is that in the event of such a sale the consideration is to be held by the trustees on trust in accordance with clauses Y and T.

The rule in Congregational Union of New South Wales v Thistlethwayte

48 It was submitted on behalf of the appellant that the trusts provided for in clauses Y and T would in the circumstances amount to an unlimited absolute gift of income which would carry with it a gift of corpus as explained in Congregational Union of New South Wales v Thistlethwayte[30]. We do not accept that contention. The rule is one of construction and hence as was said in Congregational Union v Thistlethwayte it must yield to sufficiently definite indications of intention to the contrary. Here there are definite indications to the contrary. The testator allowed for the possibility of a corporatisation under which the trustees would retain control of the Sweeps business through one or more corporate vehicles, and in such circumstances it cannot be doubted that the testator intended the trustees to continue to hold and conduct the corporatised business on trust to pay the income in accordance with clause Y. As has been explained, it is not open to conclude that the testator intended a different result if a corporatisation resulted in the trustees losing control of the business.

49 It follows in our opinion that any shares received as consideration under the proposal for sale of the Sweeps business to Tattersalls Ltd would have to be held upon the trusts provided for in clause Y. The only way in which those shares might be distributed to beneficiaries would be pursuant to an order under s.63 of the Trustee Act 1958, or perhaps s.63A, assuming without deciding that the circumstances warranted an order of that kind, or if all beneficiaries were sui juris and agreed, under the rule in Saunders v Vautier[31].

The trusts in clauses Y and T

50 Earlier in these reasons we mentioned that it would be necessary to say something more about clause T. The point was made by the judge below. As his Honour explained, the trusts as to net profits provided for in clause Y mean the trusts as to net profits contained both in clause T (via clauses Z, CC and FF) and in clause Y. That result comes about because the bequest to the so-called Charities in clause Z was held invalid, with the result that the one tenth share of the profits intended for the Charities and such other parts of the profits which for any reason might be unapplied or undisposed of should go as upon an intestacy under clause T.[32] In the view which we take of the operation of clause NN, the shares received by the trustees upon sale of the Sweeps business under the proposed restructure would be held on the trusts as to net profits contained both in clause T (via clauses Z, CC and FF) and in clause Y.

51 Much of the argument before us, and we gather before the judge below, was premised on the assumption that if clause DD were engaged upon a sale under clause NN, the consideration would be distributable among only those beneficiaries specifically named in clause Y, thereby excluding beneficiaries entitled to a share of clause Y profits under clause T via clauses Z, CC and FF. In case it comes to matter, we think that the assumption is unfounded.

52 Evidently, it rests on the words "before named Legatees" in the direction in clause DD to "divide the [proceeds of winding up and realisation] between and amongst the before named Legatees of the net profits of the said business in the same proportions as they are hereinbefore directed to divide between them the said net profits." The only legatees "before named", in the sense of having their name specifically mentioned, are those whose names are listed in clause Y. The thought no doubt is that the words mean what they say. But that appears to us to overlook two things of significance:

• First, clause DD refers not only to the "before named Legatees" but also to dividing the consideration "in the same proportions as they are hereinbefore directed to divide between them [the before named Legatees] the said net profits", and the testator expressly provided in clause Z that the trustees were to distribute to the Charities "any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of."

• Secondly, and consequently, unless the expression "before named Legatees" in clause DD is read as importing the provision in clause Z for distribution of shares of profits unapplied or undisposed of, it means that in any case where there is a share of profits unapplied or undisposed of, as there is, the trustees are required to distribute the proceeds of winding up and realisation in proportions that would not exhaust the whole, thereby creating an intestacy as to the balance.

53 Since the testator foresaw the possibility that shares of profits might be unapplied or undisposed of, and expressly provided how they were to be dealt with, it is more likely that he intended the designated recipients of those profits to share in any distribution of the proceeds of winding up and realisation than that they go directly as upon an intestacy.[33] After all a will is to be construed to avoid an intestacy if that is possible.[34]

Conclusion

54 For the reasons given, we would allow the appeal and set aside the judgement and orders the subject of appeal. In lieu thereof we would declare that the question which constituted the preliminary issue should be answered as follows:

Upon the proper interpretation of the will, if the proposed restructure were implemented, the consideration received for the sale or transfer of the Sweeps business should be held on the trusts as to net profits contained in clauses Y and T (via clauses Z, CC and FF).

[1] The codicil is not relevant to this matter.

[2] Clause X.

[3] By way of amendment to the Gambling Regulation (Amendment) Act 2004 (Vic) to enable the transfer of relevant licenses from the trustees to Tattersalls Ltd.

[4] Including the shares in existing companies operating the business.

[5] In the proportions to which they are so entitled.

[6] Consisting of particular hotels and buildings in Sydney, New South Wales.

[7] ie. under the previous clauses of the will.

[8] Subject to all of the provisions of clauses B-J.

[9] The Hobart property was distributed long ago but clause T is relevant to the question the Trustees sought to have answered, below.

[10] ie "Tattersall Sweep Consultation care of George Adams".

[11] Being a licence from the Government of Tasmania granted under the provision of the Suppression of Public Betting and Gaming Act 1896_._

[12] In respect of 40 percent of the 80 percent share of net profits.

[13] The provision with respect to the employees was the subject of a number of cases: Barry v Adams, unreported judgment Supreme Court of New South Wales, 15 October 1907; Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 488-9 and 527; Turner v Watchorn, unreported judgment of the Supreme Court of Tasmania, 3 February 1954; Millar v Hornsby [2000] VSC 270.

[14] A Deed of Settlement to this effect was approved by Mandie, J. on 11 November 2004.

[15] The gifts to charities in clauses Z, AA and FF were held invalid: see Barry v Adams (1907) 7 SR (NSW) 804, Attorney-General (NSW) v Adams [1908] HCA 51; (1908) 7 CLR 100; the trust for accumulation was held invalid under the Thellusson Act: see Blair v Curran [1939] HCA 23; (1939) 62 CLR 464.

[16] See Blair v Curran, ibid.

[17] The judge below noted at [26] fn 9 that there was an overlapping of beneficiaries between clauses T and Y that was not relevant to the proceeding.

[18] The remaining five percent of the shares having been disposed of under the compromise relating to the employees.

[19] The paragraphing of the will into clauses was undertaken posthumously with the intention that it might aid in understanding. We have set clauses DD, EE and FF together in order to make them appear as they were drafted.

[20] scil. named in clause Y.

[21] We have added the italics for emphasis.

[22] As will be seen, it is this provision for corporatisation to which is directed the qualification in clause EE: "(except as hereinafter is specially provided)".

[23] Again, we have added the italics for emphasis.

[24] According to the maxim: expressio unius est exclusio alterius.

[25] Re Benjamin [1938] VicLawRp 17; [1938] VLR 76; Jacobs, Law of Trusts in Australia 6th Ed. at [2045].

[26] As to which, see: Towns v Wentworth [1858] EngR 371; [1858] 11 Moo. PC 526 at 550[1858] EngR 371; , 14 ER 794; In the Will of Barnett [1919] VicLawRp 75; [1919] VLR 524 at 527-8, and 530; Tatham v Huxtable [1950] HCA 56; (1950) 81 CLR 639 at 651.

[27] Re Potters Will Trusts [1944] Ch 70 at 77.

[28] Again, we have added the italics for emphasis.

[29] scil. named in clause Y.

[30] [1952] HCA 48; (1952) 87 CLR 375 at 438; see also Re Inman [1965] VicRp 36; [1965] VR 238 at 240; Re Denhnert [1973] VicRp 43; [1973] VR 449 at 450.

[31] [1841] EngR 765; (1841) Cr & Ph 240, [1835-42] All.E.R. Rep.58; Berry v Green [1938] AC 575 at 582; cf. Cox v Archer [1964] HCA 18; (1964) 110 CLR 1 at 5.

[32] See footnote 15.

[33] For an example of comparable reasoning, see: Re Peacock [1958] NZLR 374 at 385.

[34] Re Harrison (1885) 30 Ch D 390 at 393; Re Edwards [1906] 1 Ch 570 at 574; Re Edwards [1981] VicRp 76; [1981] VR 794 at 795; Re Beck [1999] VSC 318 at [14].