Arnold v Hancock & Anor

In *Arnold v Hancock & Anor*, the High Court of Australia considered a dispute concerning the interpretation of a will and the proper distribution of an estate. The primary issue before the Court was whether a specific bequest of shares in a company, which had undergone a significant corporate restructure prior to the testator's death, should be interpreted as referring to the shares as they existed at the time of the will's execution or as they were constituted at the time of death.

The Court was required to determine the correct approach to construing a testamentary gift of shares in circumstances where the company's share structure had been altered between the making of the will and the testator's death. Specifically, the Court had to decide whether the doctrine of ademption applied, or if the gift should be construed as referring to the testator's ultimate interest in the company, however that interest might be represented by shares at the time of death.

Gummow and Heydon JJ applied established principles of testamentary construction, emphasising the importance of ascertaining the testator's intention from the language of the will itself, read in light of the surrounding circumstances. Their Honours referred to the rule that a gift of specific property will adeem if the property is not in existence at the time of the testator's death in the form in which it was given. However, they also considered exceptions to this rule, particularly where the testator's intention appears to be to give not the specific thing, but rather the testator's interest in a particular undertaking or fund. In this instance, the Court found that the corporate restructure had fundamentally altered the nature of the shares, leading to the conclusion that the specific bequest had adeemed.

The High Court allowed the appeal, finding that the specific bequest of shares had adeemed. Consequently, the shares in question fell into the residue of the estate.