Ramsay v Trustees Executors & Agency Co Ltd - [1948] HCA 44 - HCA 1948 case summary — Zoe

CTHHCA

Ramsay v Trustees Executors & Agency Co Ltd

[1948] HCA 44

High Court of Australia|1948-07-01|Before: Williams JJ, Lowe J

At a glance

AI case summary

Result

appellant. Appeal dismissed with costs (per majority). Dixon J and Williams J would have allowed the appeal and declared the appellant entitled to immediate absolute interest in the residuary estate.

Key principles

The High Court was divided 3:2 on whether a testamentary provision making a gift of corpus to a son conditional upon the termination of his existing marriage (by divorce or death...
The majority (Latham CJ, Starke J, McTiernan J) held that the provision was valid, applying the 'tendency test' from Fender v St John-Mildmay [1938] AC 1: a provision is void...
The minority (Dixon J, Williams J) held that the condition subsequent and gift over were void, following In re Caborne; Hodge v Smith [1943] Ch 224. They held that it is contrary...
The Court unanimously rejected the argument that the provision was void as an illegal condition precedent or condition subsequent in the technical sense, agreeing that the proper...

Issues before the court

Whether a testamentary gift of income to a son during his existing marriage, with corpus vesting absolutely upon termination of that marriage (by...

Plain English Summary

A father left his estate in trust, giving his son the income while the son stayed married to his current wife, with the capital (corpus) going to the son only when the marriage ended (by divorce or death). If the son died before his wife while still married, the money would go to others instead. The son argued this encouraged him to get divorced to get the capital sooner, making it against public policy. The High Court split 3-2. The majority said ordinary people wouldn't be tempted to destroy their marriage for money, so the provision was valid. The minority said any provision that rewards divorce is automatically against public policy, regardless of whether people actually act on it. The son lost because the majority ruled against him.

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Judgment (42 paragraphs)

[1]

High Court of Australia Latham C.J. Starke, Dixon, McTiernan and Williams JJ. Ramsay v Trustees Executors & Agency Co Ltd [1948] HCA 44

[2]

This is an appeal from an order of the Supreme Court of Victoria (Lowe J.) with respect to the validity of a provision contained in the will of the late George Binnie Ramsay. The testator directed that his property be sold and converted into money and after providing for certain legacies the will continued: - "Subject thereto to pay the income of my estate to my son George Binnie Ramsay for such period and so long as he shall remain married to his present wife Irene Ramsay and on the termination of such period in trust for my said son absolutely provided however that should my said son predecease his said wife during such period my estate shall go to my said nephew Robert Ramsay and my sister Mary Marshall Baillieu in equal shares." Thus the testator gave the income of his estate to his son during the period of his then existing marriage and upon the termination of that marriage the corpus was given to the son if he were alive, but, if the period of the marriage were terminated by reason of his death before the death of his wife, the corpus was given to the nephew and sister. If the provision is valid the son becomes entitled to the corpus in the following events: (1) if his wife (still being his wife) dies before him; or (2) if his marriage is terminated by divorce. If, however, the son predeceases his wife during their marriage the corpus goes to the testator's nephew and sister. Upon an originating summons taken out by the son it was held by the learned judge that the son was not entitled to an immediate absolute interest in the residuary estate of the testator, that his present interest was an interest in the income thereof so long as he lived and remained married to his present wife, and finally, that if he died during the subsistence of that marriage the gift in favour of the nephew and sister of the testator would take effect. It was argued for the son that the interest in the corpus was given upon an illegal condition because the form of the gift provided an inducement to the son to bring about a divorce so as to satisfy the condition contained in the words "on the termination of such period," whereupon he would obtain an absolute right in the corpus. The evil feature which produces the illegality is said to depend upon the alternative gift of the corpus (which is not a "gift over") to the nephew and sister. They take only if the son should predecease his wife during their marriage. This provision is attacked as providing an inducement to the son to bring his marriage to an end so that the condition upon which the nephew and sister would take can never be satisfied. If it is invalid the son would, it is argued, be entitled to the income first and then to the corpus and, under the rule in Saunders v. Vautier [1] , to the whole interest in the corpus absolutely and immediately.

[11]

The question whether a case falls within the prohibited class must be determined by a consideration of its general tendency, as Lord Atkin said, to provide a temptation and an estimate of the risk that persons would yield to that temptation. This question must be decided without evidence: In re Wallace; Champion v. Wallace [3] . There is no doubt that in the case of some persons a gift of this character would have a tendency to bring about a divorce. In exactly the same way there is no doubt that in the case of some persons the gift of property to A for life and then to B would lead B to kill or to try to kill A so as to accelerate his interest. But normal human beings do not kill others to get property, and it has never been held that gifts coming into operation upon the death of a person are unlawful as providing encouragement to murder. Crompton J. said in Egerton v. Brownlow [4] : - "It seems to me extremely dangerous to limit the power of disposition on any general notion of impolicy, without some definite rule or principle being shown to apply to the case. The principle that no disposition could be allowed which might hold out a temptation to commit crime is clearly much too general to be supported. It would embrace almost every disposition and contract where a party is to expect a benefit from the death of another, nor can it be the true test whether impure or corrupt means may possibly be used. Although it may be impossible to lay down any definite rule which should include every case, that which was suggested by Mr. Rolt in his argument seems to me a truer and less objectionable test - whether there is anything illegal in the object to be attained, and whether, if not illegal, that object is either necessarily or according to the course suggested by the party to be attained by wicked or illegal means. If the object be illegal, as murder, theft, or other crime, of course the stipulation is illegal. So if the object can only be obtained by corruption or wickedness, the stipulation will be illegal and void; and even if the object be laudable, and may be attained by honourable means, still if it can be attained by improper means, and the party creating the condition makes such means the mode of performing it, the condition will be illegal and void." Crompton J. was one of the nine (out of eleven) judges whose advice was not taken by the four learned lords who constituted the majority of the House of Lords, but the judgment in the House of Lords does not conflict with the statement of principle which I have quoted from the answers of Crompton J. to the question submitted to the judges.

[28]

The estate consists of personalty. After a direction to convert and to pay debts and two small pecuniary legacies the will declares trusts of the residue. There is a trust to pay the income to the testator's son for such period and so long as he shall remain married to his present wife and on the termination of such period a trust for the son absolutely, that is, of a full interest in corpus. If the limitations stopped there the son would take absolutely because the gift of income and the gift of corpus would combine to create in him an absolute interest. But the will does not stop there. There is a gift over in the form of a proviso. It provides that should the testator's son predecease the son's said wife during such period the estate should go to the testator's nephew and sister in equal shares. The effect of the limitations is to confer upon the testator's son a full interest in corpus and income subject to a gift over in the event of his dying before his wife without either of them obtaining a decree of dissolution of marriage. Thus divorce is made an essential part of a compound event upon which is made to depend a condition defeating a gift and giving rise to an executory limitation over. The question is whether such a condition is invalid as contrary to the policy of the law. I have come to the conclusion that it offends against a principle deeply rooted in our law. The principle is expressed in a dictum of Lord Hatherley which occurs in the case reported as H. v. W. [1] : "It is forbidden to provide for the possible dissolution of the marriage contract, which the policy of the law is to preserve intact and inviolate." It offends against this principle because dissolution of the marriage contract between the donee and his wife is an event or object the condition is framed to encourage. The event, the occurrence of which will prevent the operation of the condition to defeat the gift, is one which it is against the policy of the law to choose for such a purpose. It is therefore not a question how far a gift in such a form is or is not likely to contribute actually to bringing about the event. Conditions subsequent are not to be framed for the purpose of divesting the interest given unless a divorce is secured. This is the decision of Simonds J., as he then was, in In re Caborne; Hodge v. Smith [2] , following that of Farwell J. in the unreported case of In re Friedman. These decisions are directly in point and necessarily govern the present case unless the Court is of opinion that they are wrong and should not be followed. The judgment of Lord Simonds in In re Caborne [2] is well considered and is based on an examination of the case law. There is every ground why its authority must be high. But independently of the persuasive force of his Lordship's decision, it appears to me to be an application of a principle forming part of the policy of the law settled long ago and one which has not been affected either by the passage of time or by the spread of a somewhat different outlook upon marriage or by the alteration of the divorce laws or by the existence of judicial misgivings concerning the actual harmfulness of conditions or provisions favouring or contemplating divorce. It can hardly be doubted that it is still the policy of the law to preserve and maintain marriage. The reason why conditions of the kind now in question are considered inconsistent with that policy is because they amount to a use of the testamentary power of disposition in opposition to the maintenance of the marriage. To frame a limitation so that property goes over unless the donee's marriage with his wife is dissolved by decree, failing her predeceasing him, is to construct a pecuniary or proprietary inducement to one or both parties to use any opportunity for the dissolution of the marriage. But the law having adopted a settled policy, once it is seen that a condition subsequent is framed in opposition to that policy, the law does not proceed to examine or weigh the probabilities of the inducement established by the limitation proving effective. It does not do so either in the given case or by considering the presumed responses of the average reasonable man. When, as in the present case, the form of the gift is in opposition to the policy of the law, that, as I understand the matter, is enough to invalidate the condition.

[33]

In this case I have come to the conclusion that the appeal should be dismissed. I do not think that the disposition of the residue is at variance with public policy. The head of public policy invoked is marriage. This, of course, is not a novel head of public policy. The relation of husband and wife is important to society and it is the policy of the law to maintain the relation. The policy of the law is affected by the view adopted by Parliament that marriage is a secular contract dissoluble on certain grounds. The test of whether a disposition of property is at variance with the policy of the law is its tendency to injure the public interests. It is necessary to consider whether the disposition of the residue in the present case has an injurious tendency of this character. It would have this character if its tendency is to promote crime, immorality or conduct harmful to the marriage of the testator's son. I cannot agree that the disposition in question has any such tendency. The proper ingredients of an inquiry into the tendency of a disposition of property or a contract are explained by the Lords in Egerton v. Brownlow [1] and Fender v. St. John-Mildmay [2] . The approach is an abstract and theoretical one. It must be made apart from particular individuals. The character of the testator's son and his wife are not in question. Indeed, there is no evidence about their character. Presumably they are persons of excellent character and neither would take any action to bring about a dissolution of the marriage in order to enlarge the husband's fortune. But that consideration is not decisive on the question whether or not the bequest has a mischievous tendency. If, on the other hand, the testator's son and daughter were not persons of good character neither would that consideration be decisive. If it were, the husband might profit by being a person of evil propensities. But in the application of the test he is not under a disadvantage because he is honorable. I apprehend that the matter of which the Court must be satisfied is that, speaking generally, the practical result of a bequest in the terms of the present one would be to promote conduct inconsistent with the due performance of the obligations of the marriage in the hope that divorce would result. It is to be remembered, as Lord Atkin observed in Fender v. St. John-Mildmay [3] , "The obligations are not all included in the legal phrase, rendering conjugal rights." I should think that it would be the rule that a disposition of property like that made by the testator in the present case would not expose a husband to the temptation to contrive by unlawful or wicked means, or otherwise, to end his marriage. If there are exceptions, these would prove the rule. By way of an analogy, it would be contrary to all experience to say that a remainderman is by the will or other disposition, under which he is entitled to property, exposed to a temptation to hasten the death of the life tenant. The generality of persons in a civilized community respect the sanctity of marriage as well as of life, and would not be induced by pecuniary gain to destroy one or the other. It is not reasonable to suppose that the terms of the disposition of residue create any practical conflict between the son's duty as a husband and his interest as a beneficiary. Illegality is not to be presumed. Applying the test of tendency, as elucidated in the decisions which have been cited, I am not satisfied that this disposition of residue is at variance with public policy. If this result is contrary to the ratio decidendi in the case of In re Caborne; Hodge v. Smith [1] , with respect, I feel that I cannot alter it in deference to that decision. The apparent object of the testator here was to exclude the possibility of the acquisition by his son's wife of any of his property. Of course, he was bound to observe the restraints imposed by public policy on the freedom of testamentary disposition in desiring to exclude his daughter-in-law; he may have been actuated by dislike for her or he may have ranked the claims on his bounty of his son and the two relatives mentioned in the proviso to the bequest of the residue higher than the claims of his son's wife. He was free to make that preference. There is no ground for holding that the testator exceeded any restraint imposed by law upon the freedom of testamentary disposition.

[40]

The effect of the condition in the present case is to keep the corpus of residue out of the reach of the appellant so long as he remains married to his present wife. It is evident that the testator disliked the present wife, and his sole motive may well have been simply to prevent her participating in his capital even indirectly as a beneficiary under the will of the appellant if he predeceased her. But it is now established that a gift is void on the ground of public policy, whatever may be the motive of the donor and whatever might be its effect in a particular case, if, to adapt the words of Lord Atkin in Fender v. St. John-Mildmay [1] donees under a gift of such a nature would generally, in a majority of cases, or at any rate in a considerable number of cases, be exposed to a real temptation by reason of the gift to do something harmful, i.e., contrary to public policy; and it is likely that they would yield to it. Agreements for future separation between husband and wife have always been held to be against the policy of the law. Agreements or gifts which have a general tendency to lead to a future separation or to a divorce must equally be against its policy. The position is succinctly stated by Simonds J. in In re Caborne [2] : "Whether the matter be looked at from its religious or civil aspect, the positive duty of reconciliation and the danger of a provision which tends to encourage a departure from that difficult path are equally obvious. How often must any judge in this Division, exercising the familiar jurisdiction over infants, have felt a profound conviction that the welfare of his wards and the interest of society as a whole could best be served by a reconciliation of the parents, and, perhaps, deplored the readiness with which the one or other, or too often both of them, embraced the opportunity of statutory relief. An inducement to that step by the promise of material advantage must, in my judgment, be utterly invalid." A gift which is made to depend upon the dissolution of an existing marriage by divorce would have a general tendency to wrong. The fruition of the gift of corpus to the appellant is not made to depend solely upon a divorce. He may reach the corpus by his present marriage coming to an end either by divorce or the prior death of his wife. But it appears to me that the gift has a similar harmful tendency whether the attainment of the corpus is conditional on the marriage coming to an end by a divorce alone or by the alternative events of a divorce or the prior death of the wife. The provision which has the harmful tendency is the proviso. It is the fact that the corpus is given over if the appellant dies during the existing marriage which provides the tendency to end this marriage by a speedy divorce so that this blot on his title may be removed. Such a provision has a tendency to induce the spouse who benefits to give the other spouse grounds for a divorce in the hope that the latter will take advantage of them. It might prevent the former condoning some ground for a divorce afforded by the other spouse. It might lead to a collusive divorce with a view to a subsequent remarriage. It might interrupt the true consortium of married life by making the spouse who did not benefit suspicious of the motive for some conduct of the spouse who did. As Simonds J. said in In re Caborne [1] the proviso tends to encourage an invasion of the integrity and sanctity, and I might add happiness and maintenance, of married life and it is, in my opinion, void on the ground of public policy.

Ramsay v Trustees Executors & Agency Co Ltd

At a glance

Result

Key principles

Issues before the court

Plain English Summary

Judgment (42 paragraphs)

Cited legislation

Parties

Cited By (1)

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