Backhouse v Lloyd

The appellants, Katherine Backhouse and Ellen Constance Campbell, appealed to the High Court from a decision of the Supreme Court of South Australia. The dispute concerned the distribution of income from the testatrix's estate, which was insufficient to meet all the intended payments. The core of the disagreement was whether the annual sums payable to the respondent, Moira Kathleen Gordon, should abate in favour of the appellants, or vice versa.

The legal issues before the High Court were: firstly, whether the respondent, Mrs. Gordon, was entitled to be paid her annual sum in priority to the appellants; and secondly, whether the annual sums should abate given the insufficiency of the estate's income. The central question revolved around the construction of clause 9 of the will, specifically whether it constituted a residuary gift to the sisters or a gift of a distinct fund.

The High Court, affirming the decision of the Supreme Court, held that clause 9 constituted a residuary gift to the appellants. The reasoning applied was that a residuary legatee is generally not entitled to receive anything until particular legacies are fully satisfied. The court found that the provisions in clause 9, which dealt with the income from the £10,000 and £8,000 funds and the residue of the trust fund, were intended to capture whatever remained after prior trusts were fulfilled. Therefore, the appellants' claims were postponed to those of Mrs. Gordon, who was considered to have a prior claim as a legatee of a specific annual sum. The appeal was dismissed.