Arthur v Public Trustee - [2004] SASC 175

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ARTHUR AND ANOR v PUBLIC TRUSTEE AND ANOR
Judgment of The Honourable Justice Perry
17 June 2004
WILLS, PROBATE AND LETTERS OF ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS
Public Trustee applied for directions as to the construction of a will, the provisions of which had been varied by an order made in 1956 under the Testators Family Maintenance Act 1918 - the order provided that Public Trustee hold one moiety of the net residue of the estate "upon trust to retain and hold or apply the same" for the benefit of the testator's daughter, and in his discretion to make advances for her maintenance or benefit - held that on her death, there was an intestacy as to the remaining balance of the funds in the hands of Public Trustee - observations as to the principles to be applied in construing wills.
Administration and Probate Act 1919 s 69(1); Testators Family Maintenance Act 1918 s 6, referred to.
Williams on Wills Vol 1 (7th edition) page 513; Papillon v Voice (1728) Kel W 27 at 32; Earl of Scarborough v Doe d Savile (1836) 3 Ad & El 987, considered.

ARTHUR AND ANOR v PUBLIC TRUSTEE AND ANOR
[2004] SASC 175
Civil

PERRY J This is an application by Public Trustee pursuant to s 69(1) of the Administration and Probate Act 1919, for advice or directions as to matters connected with the administration by her of the estate of Samuel Roy Arthur (“Mr Arthur”) of which Public Trustee is sole executor.
Mr Arthur died on 23 January 1955. Probate of his last will was granted on 4 March 1955.
The operative provisions in the will were simple. He gave a pecuniary legacy of £300 to his wife, Elsie Louisa Maud Arthur (“Elsie”) and the residue of his estate to Martha Hughes (“Martha”).
Mr Arthur and Elsie married on 21 November 1911. In May 1920, they separated. Thereafter they lived apart.
From some time, which appears to have been in the early 1940s, Mr Arthur began living with Martha.
There were three children of Elsie’s marriage to Mr Arthur. They were Mavis Elsie Walsh (“Mavis”), Jean Margaretta Arthur (“Jean”) and Richard James Arthur (“Richard”).
Mavis died on 28 May 1994. Richard died on 7 December 2002.
Until her death on 11 September 2003, Jean lived with her mother, Elsie.
Jean did not marry. She had been an invalid all her life. About all that she could do without assistance, was walk. She needed constant care.
On 27 May 1955, an application was brought in this Court by Elsie and Jean, claiming an order in their favour under the Testator’s Family Maintenance Act 1918 (“the TFM Act”), for an increased provision from the estate of Mr Arthur.
In those proceedings, on 29 May 1956 an order was made by consent by Ross J. The operative part of the order is as follows:
“... IT IS ORDERED
1.That the following provision be made out of the Estate of the deceased, for the Maintenance and Advancement in life of the Plaintiffs ELSIE LOUISA MAUD ARTHUR and JEAN MARGARETTA ARTHUR the provision for the said ELSIE LOUISA MAUD ARTHUR being in substitution for the legacy given to her by paragraph 3 of the Will of the Deceased:
(a)     That instead of the bequest of the residue of the deceased’s estate to the Defendant Martha Hughes contained in paragraph 4 of the deceased’s Will the said MARTHA HUGHES shall receive from the estate of the deceased the sum of Five Hundred pounds (£500) free of Succession and Estate Duty.
(b)    That the net residue of the estate of the deceased after payment of the sum of Five hundred pounds (£500) referred to in subparagraph (a) hereof and after payment by Public Trustee of all debts funeral and testamentary expenses (including Public Trustee’s commission) and Succession and Estate Duty shall be held by Public Trustee as to one moiety thereof upon trust for the Plaintiff ELSIE LOUISA MAUD ARTHUR absolutely and as to the other moiety thereof upon trust to retain and hold or apply the same for the benefit of JEAN MARGARETTA ARTHUR as hereinafter set out.
(c)    That Public Trustee be empowered to expend at his discretion the whole or any part of the share held on behalf of the plaintiff JEAN MARGARETTA ARTHUR on purchasing in his own name as tenant in common with the Plaintiff ELSIE LOUISA MAUD ARTHUR and on such terms and conditions as Public Trustee shall decide a dwelling house for the occupation of the Plaintiffs.
(d)    That subject to the provisions set out in the preceding paragraph Public Trustee be empowered from time to time or at any time to pay or apply for the maintenance or benefit of the said JEAN MARGARETTA ARTHUR out of her share in the residue of the estate of the deceased or from income thereof (either in single sums or in periodical instalments) such sum or sums as Public Trustee in his discretion shall think fit.
2.     ....”
In accordance with that order, Public Trustee held one moiety of the net residue of Mr Arthur’s estate for Jean’s benefit.
At the date of Jean’s death, Public Trustee held the unapplied balance of that moiety. That balance then amounted to $56,439.55. It is now a little more.
In her present application, Public Trustee seeks a direction as to who is entitled to that fund.
The answer to that question depends upon the construction of the order of Ross J made on 29 May 1956. The difficulty which arises is that the order did not expressly provide for what should happen to any balance remaining upon Jean’s death.
There are two possible outcomes.
The first is that the balance of Jean’s fund now in the hands of Public Trustee should be regarded as property not disposed of by Mr Arthur, and should now be distributed to those who take on an intestacy in his estate.
The alternative possibility is to regard the moneys as forming part of Jean’s estate, with the result that it should be distributed to those who take on her intestacy.
On 23 January 2004, I made an order that Public Trustee give notice of the proceedings to those entitled to succeed to Jean’s intestate estate. At the same time, I gave leave to any of them who might choose to do so, to intervene in the proceedings by filing an address for service.
It appears that there are five surviving children of Jean’s brother and sister. They were notified in accordance with my order, but have chosen not to intervene.
Mr Roder was briefed initially to appear for Public Trustee. At my suggestion, separate counsel, Mr Magarey, was briefed to present an argument against the construction put forward by Mr Roder.
In that way, I had the very considerable benefit of submissions from counsel contending for the two alternative constructions.
The Argument
Section 6 of the TFM Act reads:
“6.Every provision made by an order shall, subject to this Act, operate and take effect as if the same had been made by a codicil to the will of the testator executed immediately before his death.”
Counsel submitted that, given that by virtue of that provision, the order of Ross J should be read as a codicil to Mr Arthur’s will, in construing the order, it is appropriate to apply the principles applicable to the construction of wills.
While no doubt that is true in a general sense, in the circumstances of this case, I think that some qualification is needed.
The central principle commonly applied in construing a will is that effect must be given to the intention of the testator. The intention “... is not the intention in the mind of the testator at the time he made his will, but that declared and apparent in his will”.[1]
[1] Williams on Wills, Vol 1 (7th edition) page 513, citing Papillon v Voice (1728) Kel W 27 at 32; Earl of Scarborough v Doe d Savile (1836) 3 Ad & El 987
Here, it would be somewhat strained to talk of the intention of the testator, when the codicil was a product of an agreement reached after the death of the testator, between parties to litigation, which ultimately found expression in a consent order of the court.
However, insofar as the intention is determined objectively from the terms of the will, I do not suppose that it makes much difference whether one refers to the intention of the testator (a somewhat unreal test, in the circumstances) or the intention of the parties in agreeing to the terms of the consent order.
If the intention is to be determined objectively by reference to the terms of the order, it matters little as to whose notional intention it is said to be.
The other principle which may be of application is that, where possible, provided that the court does not adopt a strained interpretation of plain words, the court tends against a construction which would result in a total or partial intestacy.[2]
[2] See Williams on Wills (supra) at 531 and the cases there cited.
While acknowledging that the court tends against an intestacy, Mr Roder contended that, on a proper construction of the terms of the order in which provision is made for Elsie and Jean, the provision for Jean now falls into intestacy in Mr Arthur’s estate.
In advancing his argument to that end, Mr Roder pointed to the fact that the gift in favour of Elsie is expressed to be a gift to be held by Public Trustee upon trust for Elsie “absolutely”, whereas the word “absolutely” does not appear in that part of the order in which provision is made for Jean. The provision for Jean was expressed in terms that her moiety was to be held by Public Trustee upon trust “to retain and hold or apply the same for the benefit of ... [Jean] ... as hereinafter set out”.
In the case of Jean, what is thereafter set out empowered Public Trustee, in the first place, to expend either the whole or any part of Jean’s share in purchasing a house to be held by him as tenant in common with Elsie, for the occupation of the plaintiffs.
Subject to that, Public Trustee was empowered to “pay or apply” Jean’s share for her “maintenance or benefit”, in his discretion.
The power to make advances for Jean’s maintenance or benefit is analogous to the power conferred under the Aged and Infirm Persons Property Act 1940 pursuant to which a protection order may be made by the court in favour of a person suffering from a disability.
It seems reasonable to infer that the distinction as to the manner in which the provision for Jean was expressed in the order, was in recognition of the fact that Jean was regarded as incapable of managing her own affairs.
That circumstance may explain the absence of the word “absolutely” in the terms of the order which relate to the provision made for Jean. If that is the reason, it may be that the absence of the word “absolutely” does not necessarily connote that the intention was to give to Jean what was effectively a life interest in the money allocated to her.
On the other hand, the terms of clause 1(c) pursuant to which a dwelling house may be bought by Public Trustee as a tenant in common with Elsie, might be regarded as an indication that the gift or provision for Jean was not to be absolute, in the sense that it was to be held for her benefit alone.
Mr Roder pointed out that there were no words of gift as such in the provision relating to Jean, whereas the provision for Elsie was in terms commonly employed by a draftsman to signify an outright gift.
Mr Roder further contended that if the intention was that the property vest in Jean, this could easily have been given effect to by the making of an order under the Aged and Infirm Persons Property Act.
Mr Roder submitted that in fact the only way that result could have been achieved, that is, the vesting in Jean of her share, but subject to management and control by Public Trustee, would have been by an order under the Aged and Infirm Persons Property Act.
I am not sure whether the last contention is correct. The jurisdiction under the TFM Act is a very broad one. It is by no means obvious to me that, pursuant to that Act, a provision by way of an order of the court may not be drafted in terms under which a trustee maintains control over the application of moneys otherwise vesting in a beneficiary.
Mr Roder further argued that it is unlikely that there was an intention to vest the capital of the fund in Jean, as she was clearly not competent to make a will to deal with any residue which might remain on her death.
Against that contention, however, is the fact that there was no gift over, that is, no provision as to the application of the moneys upon Jean’s death.
The absence of a gift over on the death of Jean was pointed to by Mr Magarey as an indication that it was intended that the gift in her favour would be absolute, even though that word was not used.
Mr Magarey contended that the use of the words “retain and hold or apply” with reference to the provision for Jean, were not words which detracted from his contention that there was a gift of the moiety in favour of Jean to her. He submitted that the words “retain and hold” should be read discretely from the words “apply the same for the benefit of [Jean]”, and that the words “as hereinafter set out” qualified only the word “apply” and not the words “retain and hold”.
With respect to him, I doubt that to be a correct construction. I think that the words “as hereinafter set out” qualify the whole of the preceding phrase.
Mr Magarey drew attention to the words in s 3 of the TFM Act “Such provision as the court thinks fit ... for the maintenance, education, and advancement of such wife, husband, or children ...”.
He conceded that those words tend to suggest that the intent of an order making provision in favour of one of the named family members was to benefit that person and no-one else.
However, the fact that they are the operative words of the section has never prevented the court, when making a TFM order, from making a provision in absolute terms rather than a provision limited so as to benefit the named family member.
The arguments one way or another are finely poised. My attention has not been drawn to any case law which could assist in determining the case.
There is no single argument which should obviously prevail over other considerations.
However, at the end of the day, bearing in mind all of the considerations to which I have referred, but having regard particularly to the difference in wording of the two provisions, and the absence of the word “absolutely” or any word to that effect in the words by which provision is made for Jean, I have reached the view that the provision in her favour determined on her death.
This means that the last will of Mr Arthur, as varied by the order in question, made no provision as to the destination of the balance remaining in Public Trustee’s hands of the moiety allocated to Jean, on her demise. There was then an intestacy in his estate as to those moneys.
I order that Public Trustee distribute the balance in her hands of the moiety allocated to Jean, as on an intestacy in the estate of Mr Arthur.