Simpson v Trust Company Fiduciary Services Limited [2009] NSWSC 912 | Case summary

2643/09 EMMA MARGARET SIMPSON V TRUST COMPANY FIDUCIARY SERVICES LIMITED JUDGMENT 1 This application is brought by the three granddaughters of the late William James Monaghan ("deceased") seeking a declaration that, in the events that have happened, they have terminated a trust ("the trust") created by order 3(c)(iii) of the orders of this Court made on 13 March 1988 in Family Provision Act proceedings number 2433 of 1986, 3553 of 1986 and 3560 of 1986 or, alternatively, a declaration that the defendant, as trustee of the trust, would be justified in distributing to the plaintiffs, or as they should direct, all of the assets of the trust in equal shares ignoring any previous advances made to or for the benefit of any of them. 2 The plaintiffs' application is neither opposed nor consented to by the defendant. 3 Following the hearing of the application, I granted relief in the form of the alternative declaration sought in paragraph 1A of the Second Amended Summons filed in court on 28 August 2009 and ordered that the defendant, within 60 days, transfer to the plaintiffs in equal shares the whole of the assets of the trust, including all moneys and accumulated interest thereon. I further made an order for the payment of the defendant's costs on a trustee basis out of the trust assets. I indicated that I would publish my written reasons shortly. These are those reasons. Background 4 The deceased died on 22 March 1985. In clause 3 of his will dated 23 July 1984 he gave the whole of his estate to trustees to hold on trust to pay the annual income thereafter to his de facto wife (Mary Lorna Robson) and on her death to pay the capital and income of the said trust fund upon trust for such of the children of his daughter, Margaret Joan Simpson, "who shall be living at the death of the said Mary Lorna Robson and attain the age of eighteen years if more than one in equal shares". There was a gift over, in the event that no child or children should survive Ms Robson and attain the age of 18 years, in favour of the North Coast Children's Home in Lismore. 5 Proceedings were commenced in this Court (those being the proceedings noted above) by each of Ms Robson and Mrs Simpson pursuant to the Family Provision Act 1982. 6 Those proceedings were settled and consent orders were made on 31 March 1988. A copy of those consent orders is annexure C to the affidavit sworn 14 April 2009 of Emma Margaret Simpson, the first plaintiff. 7 Relevantly, the effect of those consent orders was to divide the deceased's residuary estate (after payment of costs, charges, fees, liabilities and expenses of the estate and a pecuniary legacy in the sum of $80,000) into three equal parts, one of which passed to Ms Robson absolutely, one of which passed to Mrs Simpson absolutely, and the remaining third being held on trust by the trustees of the deceased's will on the terms set out in paragraph 3(c)(iii), namely: (iii) as to the remaining one third share thereof upon trust for such of the children of MARGARET JOAN SIMPSON who shall be living at the date of the death of the said MARY LORNA ROBSON and attain the age of 18 years and if more than one in equal shares PROVIDED THAT should no child or children survive the said MARY LORNA ROBSON and attain the age of 18 years then upon trust for the North Coast Children's Home in Lismore … 8 The consent orders were in substance in the same form as clause 3 of the deceased's will had been drafted. 9 By deed dated 15 October 1990 (a copy of which forms part of Annexure B to the affidavit of Keith James Graham, solicitor for the plaintiffs), the trustees of the trust appointed under the will resigned as trustees and appointed the present defendant as trustee in their stead. 10 On 14 January 2009, the last of the deceased's granddaughters attained the age of 18 years. However, Ms Robson remains alive (she being in her eighties) and, until the death of Mrs Simpson, the class of beneficiaries of the trust is not closed. 11 By letter dated 5 February 2009 (a copy of which is annexure E to the affidavit of Ms Simpson), Mr Graham wrote to the trustee and requested that the trust be terminated and the funds distributed in accordance with the rule in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 (affirmed (1841) Cr & Ph 240; 41 ER 482), pursuant to which an adult beneficiary who has an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him or her and terminate any accumulation. However, the trustee was of the view that the rule in Saunders v Vautier did not apply as the beneficiaries did not yet have a vested interest (their entitlement being contingent upon their surviving Ms Robson). 12 Read on this application were affidavits from each of the plaintiffs attesting to the fact they have attained the age of 18 years; an affidavit from Mrs Simpson as to the medical unlikelihood of her conceiving any further children and that she has no intention to have or adopt further children; the affidavit of Mr Graham; and two affidavits sworn 18 June 2009 and 20 August 2009, respectively by Ms Sue Wilkins, the current chairperson of North Coast Children's Home Incorporated (NCCH Inc). 13 Ms Wilkins' affidavits provide evidence of searches which have been conducted for evidence of the nexus between the former unincorporated body known as the North Coast Children's Home located in Lismore (to which reference was made in the deceased's will) and NCCH Inc, which was incorporated on 16 May 1989. 14 Ms Wilkins has deposed to her knowledge and belief that, prior to its incorporation, the entity known as North Coast Children's Home was administered by the Anglican Diocese of Grafton and that, to her knowledge and belief, there has not been nor is there any other organisation or association in Lismore or surrounding districts with a similar name to that of the North Coast Children's Home. 15 Annexed to Ms Wilkins' second affidavit was a copy of the minutes of the annual meeting of subscribers of the North Coast Children's Home held at the home on 25 July 1988 (in which it was recorded a resolution that the unincorporated body be taken over by NCCH Inc) together with documents showing the vesting in NCCH Inc on incorporation of properties formerly bequeathed to, and owned by, the North Coast Children's Home, as well as copies of the 1951 constitution of the North Coast Children's Home and 1989 constitution of the NCCH Inc (showing that both the unincorporated body and the incorporated body had essentially the same objects) and minutes which indicated that the executive of the unincorporated body and the committee of management of NCCH Inc as at April/June 1989 had the same members. 16 In her second affidavit, Ms Wilkins states that the Management Committee of NCCH Inc has resolved to consent to the application made by the plaintiffs. 17 I am satisfied that NCCH Inc is the entity which would be entitled to the gift of residue had the gift over failed and that it is in a position to give and has given its consent to the orders sought to be made in favour of the plaintiffs. Questions for determination 18 The first question for determination is whether the plaintiffs have terminated or are in a position validly to terminate the trust. There is no doubt that they wish to terminate the trust and have written purporting to do so. The question is whether, on the proper construction of the terms of the trust created by the consent orders of 31 March 1988, the beneficiaries (who are sui juris) are presently entitled to an interest in the trust property (albeit one which has not yet vested in possession). 19 The second question is whether, assuming the beneficiaries do not presently have an estate vested in interest (and therefore cannot elect to terminate the trust pursuant to the rule in Saunders v Vautier), the court should exercise a discretion to make the orders sought in paragraph 1A of the Second Amended Summons. Construction of the terms of the trust 20 It was submitted that each of the plaintiffs has a vested interest in the trust property, the payment of which is postponed until a future date (the death of Ms Robson), as opposed to having merely a contingent interest. 21 In Austin v Wells [2008] NSWSC 1266 at [12], White J considered a similar issue. White J noted: The point upon which this case turns is the requirement [under the rule in Saunders v Vautier ] that the adult beneficiary have a vested interest. A person has a "vested" interest in property if he or she has a certain interest in the property even though the right to possession or enjoyment of the property is postponed. Such a person has an estate vested in interest. The estate is vested in possession where the person has a present right of enjoyment. If the person's interest depends upon a contingency which may or may not occur, he or she does not have a vested interest, but a contingent interest. 22 In Austin, his Honour referred to various cases which had construed gifts made under wills to beneficiaries living at a particular time. His Honour noted that in Re Butler [1980] QdR 601 at 604, Connolly J had said: … it is well established that a gift to a person at, if, as soon as, when, or provided that he attains a certain age, without further context to govern the meaning of the words is contingent this being a quality or description which the donee must possess in order to claim under the gift. ... A provision that a beneficiary shall not take any interest until he attains the prescribed age is obviously within the same principle.

and that in Re Blackwell [1926] Ch 223 and Re Francis [1905] 2 Ch 223 gifts to beneficiaries "who shall be living at the time of my death absolutely upon his attaining the age of 21 years" or upon attaining the age of 21 years without more, were held to be contingent gifts. 23 In Austin, the will provided for the residue "to vest in my said niece upon her attaining the age of 30 years". White J considered that the meaning of the word "vest" was ambiguous. His Honour thought, prima facie, it meant vesting in interest, and his Honour would have so construed the will if there were a gift over in the event of the beneficiary not obtaining the age of 30. However, there being no gift over, his Honour applied the presumption against intestacy (Jenkins v Stewart (1906) 3 CLR 799 at 804; Fell v Fell (1922) 31 CLR 268 at 275-276, 279 per Isaacs J) which requires the court to prefer a construction which is reasonably open that will avoid an intestacy. In the absence of a gift over, and in order to avoid the possibility of an intestacy, the word "vest" was construed as meaning "vest in possession". 24 In this case, there is a gift over so that no such presumption against intestacy arises. It seems to me that it is difficult to construe clause 3 of the will (or clause 3(c)(iii) of the consent orders) otherwise than as imposing two contingencies - first, that the beneficiaries shall be living at the death of Ms Robson and, secondly, that they shall attain the age of 18 years. 25 It is submitted that, in circumstances where the plaintiffs and the North Coast Children's Home consent to the termination of the trust and the distribution of the trust assets, this should give greater weight to the argument that the proviso that they be living at the date of the death of Ms Robson should be construed not as a contingency but as the time for distribution or payment of the assets. 26 With respect, I do not consider that the trust can be so construed. It seems to me that, properly construed, for an interest under the trust to vest the beneficiaries must not only have attained the age of 18 years but also have survived Ms Robson. The latter condition has not yet been satisfied. Accordingly, it is not open to the plaintiffs to terminate the trust. Declarations sought in paragraph 1A of the Second Amended Summons 27 There is power pursuant to Pt 54.3 of the Uniform Civil Procedure Rules 2005 to make the alternative declaration sought in this case. The circumstances in which the court will make such a declaration were considered in Wilcox v Poole [1974] 2 NSWLR 693; Macrae v Walsh [1927] 27 SRNSW 290 at 294-295 and Gonzales v Claridades 58 NSWLR 188 at 208-209. 28 Relevantly, in Wilcox v Poole, Mahoney J applied the reasoning in Macrae v Walsh and held that where property was held on trust for existing persons who are sui juris, subject only to the contingency of the birth of a child or children, and that contingency is so unlikely that it may be ignored, then in its discretion the court may direct distribution of the property without reference to such contingency. His Honour made it clear that the court was not, in so doing, determining the legal or equitable rights of the parties but, rather, was acting in the convenient administration of the trusts. In that case, the evidence before his Honour was that it was quite unlikely that the plaintiff, aged 58, would have any further children. Mahoney J had reference to Daniell's Chancery Practice 8th Ed pp 1539 to 1540 where the principle was stated as follows: There are some cases in which, although the interest of a party in the fund is not absolute, but subject to a contingency, it has been ordered to be paid out at once, the contingency being remote; and formerly the parties receiving the money enter into a recognisance or undertaking to refund it, in the event of the happening of the contingency; but it is no longer practicable, … to require security to refund. 29 Mahoney J noted that the principle was a beneficial one which may enable parties to have the early enjoyment of property to which they will, as a matter of practical certainty, ultimately become entitled. 30 In the present case, as noted above, evidence was adduced by way of affidavit from each of the plaintiffs which establishes that the beneficiaries have attained the age of 18 years and the evidence from their mother, Mrs Simpson, and her doctor, establishes that from a medical perspective it is highly unlikely that she will have any further children (her husband having had a vasectomy, she being in her fifties), and she has deposed on oath that she does not intend to have or to adopt any further children. 31 I was referred to the judgment of Campbell J in Gonzales v Claridades where his Honour referred to what was said in Parry & Clarke on the Law of Succession 10th ed (1996) JB Clarke ed, London, Sweet & Maxwell at 471-472 as to the ability of the court, where there is some uncertainty about a factual matter relevant to the distribution of a deceased estate, to make an order that the executors are at liberty to distribute on some particular factual basis, that not varying or destroying beneficial interests but merely enabling trust property to be distributed in accordance with the practical probabilities. 32 I was also referred to Bullas v Public Trustee [1981] 1 NSWLR 641 where Kearney J considered an application seeking a declaration and order that trustees of an estate would be justified in distributing the estate to the life tenant and her children, in circumstances where the trusts were subject to a contingency of birth of children to a woman of advanced age. In that case, as with Mrs Simpson, the relevant plaintiff was in her fifties. There, unlike the present case, the woman had undergone a total hysterectomy and other surgical operations the result of which was to render her incapable of conceiving a child. There, as here, she had sworn an affidavit that she had no intention of adopting a child. His Honour was satisfied that there was a sufficiently strong probability against adoption, but noted what had been said in Wilcox v Poole and Macrae v Walsh as to the effects of advances in medical science in this field. In those circumstances his Honour considered that it was desirable in appropriate cases that, as a term of the granting of the requisite authority to the trustees, an undertaking to account should be given to the court by the persons who are to receive the benefit of the distribution as sought. The plaintiffs in that case, as they have here, had indicated their willingness to proffer such an undertaking. 33 I am satisfied on the evidence that the plaintiffs will, as a matter of practical certainty, ultimately become entitled to an interest in the trust (subject only to the plaintiffs surviving Ms Robson) and that, where each of the beneficiaries and the NCCH Inc have consented to the making of the orders, it is appropriate (on the giving of the undertaking proffered by counsel for the plaintiffs to account for such moneys or a proportion thereof in the event that, contrary to the evidence as it appears today, Mrs Simpson should have further children), I considered it appropriate that an order be made authorising the trustees to distribute the estate in the manner sought in paragraph 1A of the Second Amended Summons. I made orders accordingly.

Simpson v Trust Company Fiduciary Services Limited

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