Blair v Curran

[1939] HCA 23

62 CLR 464

LAIR AND OTHERS

CURRAN AND OTHERS

CURRAN AND ANOTHER

BLAIR AND OTHERS

PLAINTIFFS AND DEFENDANTS,

PERPETUAL TRUSTEE CO. (LIMITED) AND

BLAIR AND OTHERS

PLAINTIFFS AND DEFENDANTS, WillConstruction-Trust to carry on sweep business-Income-Accumulation-

For expenditure for benefit, furtherance and advantage of business-Trust unrestricted as to time-Declaration in previous proceedings that trust not void for uncertainty or otherwise-Res judicata-Rule against perpetuities-The Accumulation Act (39 &40 Geo. III. c. 98)-Destination of released income- Residue-Particular residue-Issue estoppel.

By his will a testator who died in 1904 gave "all my real estate and the May 27.

residue of my personal estate of every kind and nature whatsoever in the State

Tasmania save and except " a sweep business carried on by him to certain persons, called the Hobart-property beneficiaries. He directed his trustees to carry on the sweep business and provided that eight-tenths of the profits should be divided in one-tenth or one-twentieth shares between twelve named

62 CLR 465

persons. The trustees were directed to stand possessed of one-tenth of the H. C. OF net profits of the sweep business and of any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of upon trust to accumulate the same but without being bound to invest the same or any part thereof" and to use such accumulations or any part of them for the furtherance and benefit and advantage of the business according to their discretion, and for the aid and assistance of any persons to whom, in the opinion of the trustees, aid or advantage at the particular time would be a benefit and advantage in this life and for supposed charities, the objects of which in fact went outside the scope of legal charities. The testator provided that if any of the named sweep beneficiaries should die in his life- time leaving a widow him surviving, then the proportion of profits to which he would have been entitled had he survived the testator should be paid to the widow during her lifetime. In the event of the winding up and realization of the business the trustees were directed to hold the proceeds upon trust for the named sweep beneficiaries in the same proportions as they were to take the net profits. He declared that any shares of the sweep beneficiaries either in the net profits or in the net proceeds of winding up and realization or in moneys which had been accumulated which should fall in or lapse owing to the death of a beneficiary during the testator's lifetime or owing to the death of a widow should be held upon trusts in favour of supposed charities which were held to be invalid (Attorney-General (N.S.W.) v. Adams, (1908) 7 C.L.R. 100). Two of the sweep beneficiaries, R. and B., predeceased the testator, leaving widows. By a decretal order on an originating summons issued out of the Supreme Court of New South Wales in 1907 Street J. made declarations in answer to questions relating to the interpretation and effect of various provisions in the will. In answer to a question whether the trust to employ one-tenth of the net profits of the sweep business for the purpose of the business and for charitable purposes was void for uncertainty or otherwise he declared that the trust was not void for uncertainty or otherwise but that the said trustees are at liberty to apply as much or as little of the accumulated funds derived from the said net profits

for the benefit of the sweep business as in their discretion they think fit." In answer to further questions he declared that the accumulated funds so far as not employed for the furtherance of the sweep business follow the same destination as the proceeds of such business on realization." He further declared that on realization the whole of the proceeds were to be divided amongst the named beneficiaries who survived the testator and the widows of those who predeceased him in the same proportion as they shared profits, but that the widows took estates for life only and that on the death of a widow the share in which she took a life interest passes under the gift in the said will of the testator's Tasmanian Council (2004)

property." The widow of R. died in 1936. An originating summons was taken out in the Supreme Court of Tasmania to determine the questions whether the trustees were authorized to accumulate the one-tenth of the net profits from the sweep business after twenty-one years from the death of the testator, and, if not, who was entitled to the said one-tenth, and who was entitled to

62 CLR 466

the one-twentieth share of profits which the widow of R. had enjoyed until

(1) By the whole court, that the declaration of Street J. in 1907 that the trust to employ one-tenth of the net profits for the purpose of the sweep business was not void for uncertainty or otherwise did not exclude the application of

(2) By the whole court, that the trust for accumulation was void as from Co. (LTD.)

the expiration of twenty-one years from the testator's death by virtue of the

(3) By Latham C.J., Rich, Starke and Dixon JJ. (McTiernan J. dissenting), that the Hobart-property beneficiaries were entitled to the property so released from the trust because (per Latham C.J., Starke and Dixon JJ.) the declaration of Street J. that the Hobart-property beneficiaries were entitled to the interest in the proceeds of realization released by the death of a widow should be followed as a decision on a question involving the construction of the will given many years previously which had been acted on by the parties and which was not clearly wrong; (per Latham C.J.) the testator had given a true Tasmanian residue to the Hobart-property beneficiaries into which the lapsed interest fell (per Rich and Dixon JJ.) the decretal order of Street J. created an estoppel between the parties upon the question whether the Hobart- property beneficiaries were entitled to an interest in the business falling in because a specific disposition was found to be invalid in whole or in part.

(4) By Latham C.J., Rich, Starke and Dixon JJ. (McTiernan J. dissenting), that the Hobart-property beneficiaries were entitled to the one-twentieth share of profits released by the death of the widow, which was ineffectually given to charities. Per Latham C.J. The share passed directly as Tasmanian residue. Per Rich, Starke and Dixon JJ. (Latham C.J. contra): The share was caught by the words of the clause creating a trust for accumulation of portion of the profits of the sweep business.

The application of the Thellusson Act to profits of a business, and the principles of issue-estoppel, discussed.

Decision of the Supreme Court of Tasmania (Clark J.) affirmed subject to

APPEAL from the Supreme Court of Tasmania.

The testator, George Adams, by his will dated 16th March 1901, gave, devised and bequeathed the whole of his real and personal estate in the State of New South Wales or elsewhere other than in the State of Tasmania to his trustees, subject to the several trusts, directions and provisions contained in the will. He then proceeded to empower his trustees to carry on certain businesses in New South Wales and to bequeath several annuities out of the profits thereof.

62 CLR 467

Subject as aforesaid, he directed his trustees to sell that property, and, after several specific provisions relating thereto, the testator directed his trustees (clause Q) to stand possessed of "the residue of the proceeds of sale and disposition of my real and personal estate and the moneys forming part of my personal estate at my decease in New South Wales or elsewhere other than in Tasmania upon trust in their absolute and uncontrolled discretion as fully in all respects as if they were the absolute owners thereof to pay and distribute from time to time such part or parts of the aforesaid net profits and of my residuary estate and of the income thereof as my trustees shall think fit to between and amongst such charitable benevolent or philanthropic institutions for the time being existing in each of the States of the Commonwealth of Australia and the Colony of New Zealand and such person or persons for the time being in any of the said States and Colony to whom a gift would be an assistance and benefit and such of the individual poor needy and suffering of such States and Colony and such other person or persons for the time being in needy or straitened circumstances as my trustees shall consider deserving of support and assistance."

Other clauses of the will were to the following effect S. The testator gave, devised and bequeathed unto and to the use of his trustees " "according to the nature of the property all my real estate and all the residue of my personal estate of every kind and nature whatsoever in the State of Tasmania save and except the business as carried on by me at Hobart aforesaid as a conductor of sweep consultations and the goodwill and interest thereof and therein and save and except the personal estate effects and moneys belonging to such business and save and except moneys lying to my credit in any bank in Tasmania."

T. The testator declared that the trustees should hold the property given to them by clause S upon trust for certain persons according to the shares and proportions set out in the will.

U, v. W and X. The testator gave to his trustees a sweep-con- sultation business conducted by him in Tasmania under licence issued in pursuance of a statutory authority and authorized and empowered them to continue the same. By clause W he directed

62 CLR 468

the trustees to stand possessed of the sweep business on trust to pay

debts connected therewith.

Y. The testator directed his trustees to stand possessed of the net profits arising from the carrying on of the sweep business upon trust to divide eight-tenths thereof between twelve named persons in one-tenth or one-twentieth shares and upon trust to distribute one-tenth of the profits between and amongst such of the employees Co. (LTD.)

for the time being engaged in the said business and in such propor- tions in all respects as the trustees in their absolute discretion should think fit.

Z. The testator directed his trustees to stand possessed of the remaining one-tenth of the said net profits and of any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of upon trust to accumulate the same but without being bound to invest the same or any part thereof and from time to time with the full and absolute powers of owners thereof to use such accumulations or any part or parts thereof for the furtherance and benefit and advantage of the said business in such manner and way in all respects as to them shall seem or appear best and in aiding or assisting any person or persons whatsoever to whom in the opinion of my trustees aid or assistance at the particular time would be a benefit and advantage in this life." AA. " And in aiding or assisting any one or more of the persons institutions causes or funds that my trustees are directed to assist under trusts in favour of charities hereinbefore more fully set forth."

CC. The testator declared 'that in the event of the death of any one of the before-named legatees in my lifetime leaving a widow him surviving the proportion of the said net profits to which the legatee SO dying would have been entitled had he survived me shall be paid to the widow of the legatee SO dying as aforesaid for and during her life.

DD. In the event of the trustees being unable to continue or deciding to discontinue the carrying on of his said business the testator authorized, empowered and directed them to wind up the said business and to realize the sweep-consultation business. He directed them "to stand possessed of the net proceeds of such winding up and realization including all moneys which may have

62 CLR 469

accumulated in their hands under the trust in that behalf herein- before contained or SO much of such accumulations as shall not have been used or distributed as aforesaid but after payment of all debts liabilities and prizes in connection therewith upon trust to divide the same between and amongst the before-named legatees of the net profits of the said business in the same proportions as they are hereinbefore directed to divide between them the said net profits."

FF. The testator declared 'that the shares of any of the before- named legatees of my said business either in the net profits thereof or in the net proceeds of such winding up and realizations as aforesaid and in all moneys which may have accumulated as aforesaid which shall fall in or lapse owing to the death of such legatees in my life- time or owing to the death of his widow should he leave one as aforesaid or owing to any one or more of the said legatees renouncing or disclaiming the legacy hereby bequeathed to him or them respec- tively shall be held by my trustees upon and subject to the trusts directions and provisions hereinbefore contained in favour of charities."

The testator, who was domiciled in Tasmania, died at Hobart on 23rd September 1904.

Two of the beneficiaries named in clause Y, Sir Henry Braddon and H. I. J. Rooke, predeceased the testator, each leaving a widow who survived the testator. Emma Rooke, the widow of H. I. J. Rooke, died on 22nd March 1936.

In July 1907 the executors and trustees of the testator's will took out an originating summons in the Supreme Court of New South Wales seeking the determination of a number of questions arising in the administration of the trusts of the testator's will. The summons was heard by Street J., who on the 30th October 1907 made a decretal order answering the questions. The following are the questions material to this report and the answers thereto

Question 1 (a): " Whether the charitable trusts or the trusts in favour of charities or for charitable benevolent or philanthropic purposes or institutions contained in the will of the said George Adams are or are any of them void for uncertainty or otherwise ? " Answer: "That the whole of the charitable trusts and trusts in favour of charities or for charitable benevolent or philanthropic

62 CLR 470

purposes or institutions contained in the said will and mentioned in the said question 1 (a) are void for uncertainty."

Question 1 (b): "In the event of the above question being answered in the affirmative what person or class of persons are entitled to the property or funds subject to such trusts " Answer: "That (subject to the liability to contribute to the payment of debts and to the costs charges and expenses of administration) the New-South- Co. (LTD.)

Wales assets given upon the trusts for charities mentioned in the said will and in the said question 1 (b) devolved on the death of the said testator as upon an intestacy. And that the gift in the said will of unclaimed moneys and prizes to charities is a pecuniary legacy which has lapsed."

Question 16: "Whether the trust in favour of the employees for the time being engaged in the Tattersall Sweep Consultation care of George Adams' in the said will mentioned is void for uncertainty or otherwise ? Answer "That the trust in favour of the employees for the time being engaged in the said sweep business mentioned in the said will and in question 16 of the said amended originating summons is not void for uncertainty or otherwise."

Question 17 "Whether the trust to employ one-tenth of the net profits of such business for the purposes of the said business and for charitable purposes is void for uncertainty or otherwise ?" Answer "That the trust to employ one-tenth of the net profits of the said sweep business for the purpose of the said business mentioned in question 17 of the said amended originating summons is not void for uncertainty or otherwise but that the said trustees are at liberty to apply as much or as little of the accumulated funds derived from the said net profits mentioned in the said question 17 for the benefit of the said sweep business as in their discretion they think fit."

Question 17 (a): " If the answer to the above question is in the affirmative who is or are entitled to the property subject to such trust ? " Answer: "That the said accumulated funds SO far as not employed for the furtherance of the sweep business follow the same destination as the net proceeds of such business on realization."

Question 17 (b): "In the event of the trustees winding up the said business what becomes of the one-tenth interest therein the income of which is directed to be employed as aforesaid and also of

62 CLR 471

the one-tenth interest therein the income of which is directed to be held in trust for the employees aforesaid ? " Question 17 (c): the same event what becomes of the interests of the widows of Sir Edward Braddon and H. I. J. Rooke (both of whom died in the testator's lifetime) respectively (a) during their respective lives and (b) after their respective deaths ? " Answer to questions 17 (b) and 17 (c): "That in the event of the said trustees winding up the said sweep business the whole proceeds of realization are distributable among those of the twelve legatees of the net profits of the said sweep business named in the said will and codicil who survived the testator and the widows of those who predeceased him in similar proportions inter se to those in which the said net profits are divisible but that the interests of the widows are limited to estates for life; and that on the death of a widow the share in which she took a life interest passes under the gift in the said will of the residue of the testator's Tasmanian property."

Parties interested in some of the questions thus determined (including questions 1 (a) and 1 (b) ) appealed from SO much of the said decretal order as answered the same to the High Court of Australia. Before any of the appeals was heard an arrangement was entered into that, if the High Court upheld the decision of Street J. that the trusts of the will for benevolent and other similar pur- poses were void as going beyond legal charity, the remaining appeals should be dropped. The terms of the arrangement were set out in a preliminary agreement dated 11th August 1908. The decision of Street J. as to the invalidity of the trusts for benevolent purposes was upheld (Attorney-General (N.S.W.) v. Adams 1 ). On 2nd April 1909 the persons then entitled to the nine-tenths of the net profits of the sweep business bequeathed by clause Y of the will (These persons are hereinafter referred to as "the sweep beneficiaries "), and the trustees of the testator's will and the persons entitled under clauses S and T of the will to the testator's real estate in the State of Tasmania and the residue of his personal estate in that State other than the sweep business (These persons are hereinafter referred to as "the Hobart-property beneficiaries ") executed a deed in pursuance of the agreement of 11th August

1(1908) 7 C.L.R. 100. 62 CLR 472

(*. OF A. 1908 whereby the parties "mutually agreed (inter alia) " as

the Hobart-property beneficiaries and the sweep beneficiaries do and each of them doth hereby authorize empower and direct the trustees for the time being of the said will and codicil to stand possessed of the one-tenth of the net profits arising from or out of the carrying on of the said sweep business and in the said will of the said George Adams deceased Co. (LTD.)

referred to as 'The remaining one-tenth of the said net profits and of any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of upon the trusts and to and for the ends intents and purposes for the furtherance of the said sweep business and for charities in the said will declared and set forth with respect to the same and in accordance with the arrangement arrived at by the trustees with respect thereto at their first meeting held in Sydney aforesaid in or about the month of March one thousand nine hundred and five as modified by minute No. 10 of the trustees' meeting held in Hobart aforesaid in the month of January one thousand nine hundred and nine. And the trustees do hereby declare and agree that they will stand possessed of all the moneys representing such unclaimed prizes as aforesaid in the said sweep business and of the one-tenth net profits as hereinbefore more particularly referred to or such part or parts thereof respectively as have not already been distributed by by the trustees upon the several trusts and directions hereinbefore more fully set forth with reference thereto respectively Provided however that upon a winding up sale or other disposition of the said sweep business all then undisposed of moneys of the said furtherance one-tenth share if any shall be divided between such of the sweep beneficiaries as are by the said will and the said decretal order in such case declared to be entitled thereto."

13. Save as the same are hereby expressly or by necessary implication altered or varied the trusts powers authorities and directions contained in the will of the testator as the same have been interpreted by the judgment of his Honour Mr. Justice Street shall stand and be given full effect to." By a deed dated 15th February 1912 and made between the Hobart-property beneficiaries of the first part, the trustees of the testator's will of the second part and William Joseph Adams (who

62 CLR 47362 CLR 474

forming part of the estate of the late George Adams deceased and bequeathed by the will of the said George Adams to Emma Rooke widow of the Honourable Henry Isadore Joachim Rooke ? (4) As and from the expiration of twenty-one years from the

death of the said George Adams are the trustees authorized under the trust to employ the fund of one-tenth of the Co. (LTD.)

net profits of the sweep-consultation business for the further- ance of the said business to continue to accumulate the surplus moneys in the said fund not expended in any year for the furtherance of the said business ? (5) If the trustees are not authorized to continue to accumulate

the said surplus moneys who are the person or persons entitled under the will of the said George Adams to receive the same ? Clark J., before whom the questions were argued, held that the one-twentieth share of profits which was received by Mrs. Rooke until her death thereafter became "parts of the said net profits which may for the time being for any reason be unapplied or undisposed of within the meaning of clause Z and that the trust therein declared as to the original one-tenth profits, and the unapplied or undisposed- of profits, was a trust to accumulate which by virtue of the Accumu- lation Act became void on the expiration of twenty-one years from the date of the testator's death; and that both the original one-tenth share of profits as well as the one-twentieth share of profits in which Mrs. Rooke in her lifetime had been interested were payable to the Hobart-property beneficiaries under clauses S and T of the will and not to the next of kin.

The formal answers to the questions were (so far as material) as follows :-----

Question 1: "Upon the true construction of the will of the testator" the Hobart-property beneficiaries (who, as is indicated in the judgment of Latham C.J. hereunder, were not correctly described in the order), pursuant to clauses S and T of the will, become from and after the death of the said Emma Rooke on the 22nd day of March 1936 entitled to the one-twentieth share of the net profits of the sweep-consultation business which was bequeathed by the said

62 CLR 475

will to the said Emma Rooke for her life but that while the authority and direction given to the trustees

by the parties to the deed dated the 2nd day of April 1909

to stand possessed of any part or parts of the net profits of the said sweep business which may for the time being for any reason be unapplied or undis- posed of within the meaning of the said deed upon the trusts and to and for the ends intents and purposes therein mentioned remains in force but no longer that is to say until any person entitled thereto or to any part thereof revokes the authority conferred by the said deed the one-twentieth share of the net profits of the said sweep- consultation business which was bequeathed Emma Rooke during her life is from the date of her death to be accumulated by the said trustees; but they are not bound to invest the same or any part thereof and they have the full and absolute powers of owners to use as much or as little of the said accumulated fund for the furtherance and benefit and advantage of the said sweep-consultation business in such manner and way in all respects as to them shall seem or appear best but this declaration is without prejudice to the power and authority of the trustees virtue of the said deed to apply any part or parts of the said accumu- lations to any of the purposes mentioned in clause Z of the will."

Questions 4 and 5: " That upon the true construction of the will of the testator the trust expressed in clause Z of the will was valid for the period of twenty-one years from the date of the death of the testator but thereafter was invalid by reason of the Accumulation Act 1800 and that as from the expiration of twenty-one years from the date of the death of the testator upon the true con- struction of the said will" the Hobart-property beneficiaries (again incorrectly described in the order) " became entitled to the one-tenth of the net profits of the sweep-consultation business referred to in clause Z of the will but that while the authority and direction given to the trustees

by the parties to the said deed dated the 2nd day of April 1909 to stand possessed of the one-tenth of the net profits of the said sweep-consultation business in the said deed referred to upon the trusts and to and for the ends intents and pur- poses in the said deed mentioned remains in force but no longer that is to say until any person entitled to the said one-tenth of the

62 CLR 476

476

HIGH COURT said net profits or any part thereof revokes the authority conferred by the said deed the said one-tenth of the said net profits is to be accumulated by the said trustees; but they are not bound to invest the same or any part thereof and they have the full and absolute powers of owners to use as much or as little of the accumulated fund for the furtherance and benefit and advantage of the said sweep business in such manner and way in all respects as to them shall Co. (LTD.)

seem or appear best; but this declaration is without prejudice to the power and authority of the said trustees by virtue of the said deed to apply any part or parts of the said accumulations to any of the purposes mentioned in clause Z of the will."

From this decision, the trustees, the sweep beneficiaries and the next of kin appealed to the High Court of Australia. The three appeals were heard together.

H. S. Baker (with him Leo Doyle), for the trustees of the will, appellants. It is submitted that the question of the validity of the trust in the will to accumulate and use such accumulations for the furtherance, benefit and advantage of the business is concluded by the declaration of Street J. that the "trust to employ one-tenth of the net profits of the sweep business for the purposes of the said business

is not void for uncertainty or otherwise." Reliance is also placed upon the positive part of the declaration whereby the trustees are declared to be at liberty to apply as much or as little of the accumulated funds

for the benefit of the said sweep business as in their discretion they think fit.' But, assuming that the question of validity of the trust is open for consideration, the trust upon its true construction is a trust to use and not to accumulate. When the trustees have the full and absolute powers of owners to expend as much or as little of the income as they think fit, the evil at which the Accumulation Act was directed does not exist. There is no obligation to accumulate. If the trustees did not accumulate or set aside any money, they would commit no breach of trust. They are entitled to expend the whole sum received instanter. [He referred to Jarman, Wills, 7th ed. (1930), pp. 352, 353 Halsbury, Laws of England, 2nd ed., vol. 25, p. 173; Theobald, Wills, 8th ed. (1927), p. 690.

62 CLR 47762 CLR 47862 CLR 47962 CLR 48062 CLR 48162 CLR 48262 CLR 483

of clause S, i.e., that it is enough to catch lapsed Tasmanian property. Apart from this, the order has no effect, for there is no decision by Street J. that the accumulation directed by clause Z is valid the words or otherwise in the answer to question 17 do not cover the point. A court of equity will not determine such a question in advance (Hastie v. Curdie 1 ). Consequently Street J.'s order does not interfere with the conclusion to be arrived at on the will. III. Under the agreements :-(a) The question is Have the agree- ments, or any of them, bound the clause-S beneficiaries to admit the permanent and indefinite right of the trustees, or the sweep bene- ficiaries to have the clause-Z funds accumulated till winding up, but subject to being spent, totally or partially, on furtherance, or on furtherance and charities, but on nothing else ? (b) We say No: (i) The agreements themselves are to be read subject to the will and Street J.'s order-save as to any definitely inconsistent provision and, SO read, they do not purport to constitute a trust for or power of accumulation to have any longer or greater or different operation from that legally effectuated by the will and the order. (ii) Alter- natively, the agreements per se amount to a trust or disposition for charity and furtherance jointly, and are, therefore, as to that, void in toto (Attorney-General (N.S.W.) v. Adams 2; In re Chapman Hales v. Attorney-General 3 Public Trustee (N.S.W.) v. Federal Commissioner of Taxation 4 ). This would remove the effect of the agreements and leave the result on the will and order standing as under I. above. (iii) Alternatively, the agreement or agreements constitute -1 The creation of a bad charitable trust. 2. A dis- position amounting to a void direction for accumulation at the end of either twenty-one years from death of the testator or the life of the survivor of the parties to the document or documents. For the Thellusson Act must apply to contracts disposing of property (Jarman on Wills, 7th ed. (1930), pp. 369, 370), and this is such an agreement (Comptroller of Stamps (Vic.) v. Howard-Smith 5 ). (iv) Altern- atively, the agreement or agreements is or are a bad disposition under the rule against perpetuities and SO wholly void as such, in

1(1869) 6 W.W. &a B. (E.) 91, at 2(1908) 7 C.L.R. 100. 3(1922) 2 Ch. 479. 4(1934) 51 C.L.R. 75. 5(1936) 54 C.L.R. 614. 62 CLR 484

relation both to furtherance and employees (Kennedy v. Kennedy

[RICH J. referred to In re Cassel; Public Trustee v. Mountbaten 2.]

With regard to questions 4 and 5 it is submitted that for the same reasons the original furtherance fund comes to the Hobart- property beneficiaries. Co. (LTD.)

Maughan K.C., in reply. The cases cited support the contention that clause Q is the true residue. No estoppel arises out of Street J.'s declaration that on winding up the shares of which the widows received the income go to the Hobart-property beneficiaries. The res is different from the res now before the court. The question then decided by Street J. is not of the same class or category as this ques- tion. [He referred to Marginson v. Blackburn Borough Council 3: O'Donel v. Commissioner for Road Transport and Tramways (N.S.W.) 4.]

Dean, in reply. Upon the question of res judicata the only problem is one of interpretation. Street J. has declared it is not void for uncertainty or otherwise, i.e., SO long as it is a trust. That, at least, means that the trust does not offend the rule against perpetuities. Therefore it does not offend against the Accumulation Act. Upon its true construction the clause is a trust to accumulate and use.

Doyle, in reply. The series of questions answered by Street J. were designed to cover the whole subject matter dealing both with extent and duration of the trusts. The whole life of the trust in Z is passed upon in the answers to question 17 (a), (b) and (c). A disposition of income which falls short of an imperative direction to accumulate does not come within the Accumulation Act. [He referred to Tench v. Cheese 5 Mathews v. Keble 6.] In re Mallen 7 placed the problem purely upon an accountancy basis.

Cur. adv. vult.

2(1926) Ch. 358, at p. 370. 3(1939) 1 All E.R. 273. 4(1938) 59 C.L.R. 744. 5(1855) 24 L.J. Ch. 716. 6(1868) 3 Ch. App. 691. 7(1933) S.A.S.R. 50. 62 CLR 485

The following written judgments were delivered :-

LATHAM C.J. This is an appeal from a judgment of the Supreme Court of Tasmania (Clark J.) dealing with questions affecting the interpretation and the validity of provisions in the will of the late George Adams, who died on 23rd September 1904, leaving a will which was made on 16th March 1901.

The testator conducted a sweep at Hobart in Tasmania known

"The Tattersall's Sweep Consultation care George Adams " and he had property in Tasmania which was not connected with the sweep business. He also had property in New South Wales and elsewhere. He provided in his will for the payment of certain debts and legacies out of his New-South-Wales property and directed that the residue of the proceeds of sale and disposition of his real and personal estate in New South Wales should be distributed among

charitable benevolent or philanthropic institutions' and persons to whom a gift would be of assistance and other persons who were poor, needy and suffering or in needy and straitened circumstances.

In the year 1907 proceedings by originating summons were taken in the Supreme Court of New South Wales and Street J. (afterwards Street C.J.) interpreted many provisions of the will. He held that the gift of the residue of New-South-Wales property was invalid because it purported to authorize the trustees to devote the property to objects other than charitable objects in the legal sense of that term, and that the next of kin of the testator were entitled to this property. Several parties appealed to the High Court, but their differences were adjusted by agreements, to which further reference will be made, and the only question dealt with by the High Court was that relating to the charitable or philanthropic dispositions. Upon this question the High Court affirmed the decision of Street J. (Attorney-General (N.S.W.) v. Adams 1 ). Upon the present proceedings in the Supreme Court of Tasmania it has become necessary to interpret and apply other declarations made in the order of Street J. and to consider how far, if at all, the rights of the parties under the will and under that order have been affected by the agreements mentioned.

1(1908) 7 C.L.R. 100. 62 CLR 486

The testator directed his trustees to carry on the sweep and provided that eight-tenths of the profits of the sweep should be divided in one-tenths or one-twentieths between twelve named persons. or their widows if any of those persons should predecease the testator. Another tenth was given for the benefit of employees in the sweep business and the last tenth was directed to be devoted to the furtherance of that business and to benevolent purposes. Co. (LTD.)

One of the widows of a sweep beneficiary who predeceased the testator has now died. and questions arise as to the disposition of the one- twentieth share of the profits to which she was entitled. The share is claimed by the next of kin. by the sweep beneficiaries, and also by persons to whom the testator gave his property in Tasmania other than his interests in the sweep. These latter persons have been called the Hobart-property beneficiaries to distinguish them from the sweep beneficiaries.

Mr. Justice Clark held that the Hobart-property beneficiaries were entitled to receive the share of the profits which was released by the death of the widow.

The other question which arises relates to the provision by which the trustees are directed to accumulate one-tenth of the profits of the sweep for the furtherance of the sweep business and other pur- poses. Street J. held in 1907 that this provision was not void and, as already stated, no appeal was brought against this decision. It is now urged that this provision became void after the expiration of twenty-one years from the death of the testator by reason of the Accumulation Act 1800, 39 &40 Geo. III. c. 98 (the Thellusson Act), which is in operation in Tasmania by virtue of 9 Geo. IV. e. 83. It is contended that the direction in the will ceased to operate twenty-one years after the death of the testator, SO that the profits after that date go to such persons as would have been entitled if the excessive accumulation had not been directed. Here again the contest is between the next of kin, the sweep beneficiaries, and the Hobart-property beneficiaries. Clark J. held that the Hobart- beneficiaries were entitled.

The determination of the questions which arise depends not only upon the terms of the will and upon the order made by Street J., but

62 CLR 487

also, it is contended, upon the provisions of the agreements to which reference has been made. It has been held by Clark J. that, although these agreements are not effective as dispositions of property, they are, until revoked, effective as a mandate or authority to the trustees to deal, in accordance with their terms, with the property to which they relate. These provisions have been interpreted by the learned judge as applying to both the released widow's share and the accumulations made after twenty-one years from the testator's death.

There are three appeals before the court. The trustees of the will and the sweep beneficiaries have each appealed against the decision that the Thellusson Act is applicable. The next of kin, while con- tending that the Thellusson Act applies to the provision for accumu- lation, appeal against the decision that the unauthorized accumula- tions go to the Hobart-property beneficiaries, and contend that there is an intestacy as to such accumulations, SO that they go to the next of kin. The next of kin also appeal against the decision as to the widows' one-twentieth of the profits, and contend that as to these moneys there is also an intestacy. The Hobart-property beneficiaries support the decision of the learned judge on all questions, except that they contend that they are entitled outright to all the moneys in question and that their claim is not modified or restricted in any degree by the agreements mentioned.

In order to appreciate the questions which arise it is now necessary to refer more particularly to the provisions of the will. The will has, for purposes of reference. been divided into lettered paragraphs, though it was not SO divided by the testator.

It is not necessary to consider in detail the provisions dealing with the properties in New South Wales and elsewhere. The pro- visions in clauses K and Q in favour of charitable benevolent or philanthropic institutions were, as already stated, held to be invalid. It is sufficient to say that these provisions deal with the " residuê of the proceeds of sale and disposition of my real and personal estate and the moneys forming part of my personal estate at my decease in New South Wales or elsewhere other than in Tasmania." It is therefore clear that this gift to charitable and philanthropic institutions (which has been held to be void) is not a gift of Tasmanian assets.

62 CLR 488

In clauses S and T the testator deals with Tasmanian property. This property is to be divided between five persons in stated propor- tions. These persons have been called, in the agreements to which reference has already been made, the "Hobart-property bene- ficiaries." What is given to them is "all my real estate and all the residue of my personal estate of every kind and nature whatsoever in the State of Tasmania save and except the business carried on Co. (LTD.)

by me at Hobart aforesaid as a conductor of sweep consultations and the goodwill and interest thereof and therein and save and except the personal estate, effects and moneys belonging to such business and save and except moneys lying to my credit in any bank in Tasmania."

In this clause the testator deals with all his Tasmanian property save and except the sweep business and moneys in banks in Tasmania. The question which arises upon this clause is whether, if subsequent dispositions of interests in sweep profits fail to take effect, those interests pass to the Hobart-property beneficiaries by virtue of the gift in clauses S and T of all the residue of personal estate in Tasmania except the sweep property.

In clause U and subsequent clauses the testator deals with the sweep. He expresses his desire that his trustees shall carry on the sweep under a licence under an Act entitled The Suppression of Public Betting and Gaming Act 1896. In clause W he directs the trustees to stand possessed of the sweep business upon trust to pay debts connected therewith. In clauses Y and Z he deals with the profits of the sweep. Clause Y provides that the trustees shall pay the net profits of the sweep to twelve named persons. four of whom receive one-tenth each and eight of whom receive one-twentieth. These provisions account for eight-tenths of the profits.

Clause Y also directs that one-tenth of the profits is 'to be distributed between and amongst such of the employees for the time being engaged in the said business and in such proportions in all respects as my trustees shall in their absolute discretion think fit." In the proceedings in 1907 Street J. answered a question asked by declaring "that the trust in favour of the employees for the time being engaged in the said sweep business

is not void for uncertainty or otherwise." It will be observed that his Honour

62 CLR 489

expressly refers to this provision as creating a trust and holds that it is not void for uncertainty or otherwise. Such a trust is not charitable in character; it is intended to continue for an undefined time; and the beneficiaries under it consist of a class of persons fluctuating from time to time. It might be thought, therefore, that the gift was void, but the contrary decision has been reached in litigation between all the parties who are now represented before the court and this court must necessarily accept the decision that the provision in question is not void for uncertainty or otherwise. This decision must, I think, be construed as excluding any objection based on the rule against perpetuities. It means that, at the time when the question arose, there was nothing invalid in the provision. The validity of such a provision, if it is valid, cannot be affected by effluxion of time. It might have been otherwise if the clause had provided for the accumulation of any of the profits.

The interest of the employees, however it may be defined, is an interest only in relation to one-tenth of the profits while the sweep is a going concern. A later provision in the will (clause DD) provides for the division of the proceeds of the sweep business if it is wound up. The employees take no benefit under clause DD, though, as will be seen, the persons specifically mentioned in clause Y, or their widows, do benefit under clause DD.

Clauses Z and AA deal with the remaining one-tenth of the sweep profits. They are as follows Z. And I direct my trustees to stand possessed of the remaining one-tenth of the said net profits and of any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of upon trust to accumulate the same but without being bound to invest the same or any part thereof and from time to time with the full and absolute powers of owners thereof to use such accumulations or any part or parts thereof for the furtherance and benefit and advantage of the said business in such manner and way in all respects as to them shall seem or appear best and in aiding or assisting any person or persons whatsoever to whom in the opinion of my trustees aid or assistance at the particular time would be a benefit and advantage in this life."

AA. And in aiding or assisting any one or more of the persons

62 CLR 490

institutions causes or funds that my trustees are directed to assist

under trusts in favour of charities hereinbefore more fully set forth."

These clauses relate to: (1) the remaining one-tenth of the said net profits; and (2) any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of. It will appear hereafter that it is arguable that a lapsed share which would have been payable to the widow of one of the sweep Co. (LTD.)

beneficiaries under clause Y passes under the words which I have quoted under Z.

Clause Z directs the trustees to accumulate the funds mentioned in 1 and 2 and to use the accumulations or any part thereof for three purposes which are as follows: (1) the furtherance and benefit and advantage of the said business (2) aiding or assisting persons at the discretion of the trustees (3) aiding or assisting any of the persons &. which the trustees are directed to assist under the prior trusts in favour of charities, that is, under clauses K and Q. The latter trusts were declared by the High Court to be invalid. It is plain that the direction to apply the moneys towards assisting any persons &. are also invalid. It might have been thought that a direction to apply moneys during an indefinite period for the further- ance benefit and advantage of a business was also invalid, but any arguments to that effect were rejected by Street J., who, in answer to a question asked by the originating summons in 1907, declared

that the trust to employ one-tenth of the net profits of the said sweep business for the purpose of the said business mentioned in question 17 of the said amended originating summons is not void for uncertainty or otherwise but that the said trustees are at liberty to apply as much or as little of the accumulated funds derived from the said net profits mentioned in the said question 17 for the benefit of the said sweep business as in their discretion they think fit."

Thus. SO far as the funds are directed to be employed for the purposes of the said business" (that is, for the furtherance and benefit and advantage thereof) the trust is declared to be not void for uncertainty or otherwise. This decision must also be accepted as a matter finally determined between all the parties. The declara- tion is plainly limited to the use of the funds for the purpose of the

62 CLR 491

business. It does not apply to either of the other two purposes H. mentioned.

This answer therefore, permits the trustees to accumulate moneys and to apply them in the manner stated. The first question which arises under clause Z is whether the decision of Street J. established the validity of clause Z in relation to the application of funds in the manner stated, not only as against an objection which would go to the whole of the clause (such as an objection based upon uncer- tainty or the rule against perpetuities) but also as against an objec- tion based upon the Thellusson Act. No specific question as to the Thellusson Act was asked in the summons in 1907, and there is nothing in the answer to the question to show that it was considered by the learned judge. In my opinion the answer should not be read as applying to any objection based upon the Thellusson Act. The decision that the clause is not void for uncertainty or otherwise is a decision that the clause is not entirely destitute of legal effect. In my opinion it is not a proper construction of the answer to read it as establishing the validity of the clause at all times in the indefinite future. I am therefore of opinion that it is open to parties interested to contend that the Thellusson Act is applicable to this clause notwithstanding the decision given in 1907.

The next questions which arise with respect to clause Z are whether it applies to a share released by the death of a widow of one of the legatees, and, if the clause does SO apply, what becomes of the said share. Clause CC provides that, if any legatee mentioned in clause

Y dies in the lifetime of the testator leaving a widow him surviving, then the proportion of the profits to which that legatee would have been entitled had he survived the testator shall be paid to the widow during her lifetime. Two of the legatees did predecease the testator. and each of them left a widow who has received under clause

CC one-twentieth of the net profits of the sweep. The widow of one of the legatees died on 22nd March 1936. The court is asked to determine what becomes of the share of the net profits which, if she had continued to live, she would have continued to receive. Before this question can be answered it is necessary to refer to other clauses of the will.

62 CLR 492

Clause DD deals with the possible winding up of the sweep. is in the following terms :- " DD. In the event of my trustees being unable to continue or deciding to discontinue the carrying on of my said business then I authorize empower and direct my trustees to wind up the said business and to realize my sweep consultation business and I direct my trustees to stand possessed of the net proceeds of such winding up and realization including all moneys Co. (LTD.)

which may have accumulated in their hands under the trust in that behalf hereinbefore contained or SO much of such accumulations as shall not have been used or distributed as aforesaid but after payment of all debts liabilities and prizes in connection therewith upon trust to divide the same between and amongst the before-named legatees of the net profits of the said business in the same proportions as they are hereinbefore directed to divide between them the said net profits."

Clause DD was also interpreted by Street J. In the first place the learned judge held that the funds accumulated under clause Z "so far as not employed for the furtherance of the sweep business follow the same destination as the net proceeds of such business upon realization." That destination is then defined in the answer to questions 17 (b) and (c), which is as follows That in the event of the said trustees winding up the said sweep business the whole proceeds of realization are distributable amongst those of the twelve legatees of the net profits of the said sweep business named in the said will and codicil who survived the testator and the widows of those who predeceased him in similar proportions inter se to those in which the said net profits are divisible but that the interests of the widows are limited to estates for life and that on the death of a widow the share in which she took a life interest passes under the gift in the said will of the residue of the testator's Tasmanian property." I will return to this answer after referring to one further provision of the will, clause FF, which is as follows FF. And I declare that the shares of any of the before-named legatees of my said business either in the net profits thereof or in the net proceeds of such winding up and realization as aforesaid and in all moneys which may have accumulated as aforesaid which shall fall in or lapse owing to the death of such legatees in my lifetime or owing to the death of his widow should he leave one as aforesaid or owing to any

62 CLR 493

one or more of the said legatees renouncing or disclaiming the legacy hereby bequeathed to him or them respectively shall be held by my trustees upon and subject to the trusts directions and provisions hereinbefore contained in favour of charities."

This clause deals with shares of the legatees, either in net profits of the sweep or in the net proceeds of the winding up of the sweep, if such shares fall in or lapse owing to certain events. One of the events is the death of the widow of a legatee. This, therefore, is a provision specifically declaring what is to happen to a share which falls in on account of the death of a widow. The provision is that the trustees shall hold such a share upon the trusts &. "hereinbefore contained in favour of charities." Those trusts are declared in clauses K and Q, which relate to New-South-Wales assets. The effect of this provision is not, however, to change Tasmanian assets into New-South-Wales assets. The provision simply applies refer- entially to these assets the same provisions as are applicable to New- South-Wales assets by virtue of clauses K and Q. In accordance with the prior decision of this court in Attorney-General (N.S.W.) V. Adams 1, this provision must be held to be invalid. The result of holding that clauses K and Q were invalid was that the New-South- Wales assets went to the next of kin. It does not, however, follow that the result of holding that clause FF is invalid is that any Tas- manian assets pass to the next of kin. If clauses S and T apply to Tasmanian assets which are not effectively disposed of by other provisions in the will, the lapsed shares of the widows will go under those clauses to the Hobart-property beneficiaries as Clark J. has held.

I propose now to consider this question in connection with clause

DD and the answer of Street J. to questions 17 (b) and (c).

By that answer Street J. decided that in the event of a winding up, the widows would share with the legatees in the proceeds of the winding up, including accumulations, but would take only a life interest. The employees engaged in the business are given no interest in the proceeds of winding up, and no beneficiaries are selected to take any part of the proceeds corresponding to the furtherance one-tenth of profits. Clause DD provides that the legatees (and widows), who received eight-tenths of the profits, are to receive the

1(1908) 7 C.L.R. 100. 62 CLR 494

whole of the proceeds in proportions corresponding to their share in the eight-tenths of the profits, not in the ten-tenths of the profits. Thus, some would receive a one-eighth share and others would receive a one-sixteenth share.

The effect of Street J.'s decision is that, if a winding up took place, the widows would during their lives each receive the interest upon one-sixteenth of the proceeds, and that, after the death of a widow, Co. (LTD.)

the capital of her one-sixteenth share would, if a winding up took place, pass to the Hobart-property beneficiaries under clause S, or more particularly, under that part of clause S which deals with the residue of Tasmanian personal property. His Honour construed clause S as excepting sweep assets, not in order to take them away under all circumstances and for all purposes from the persons to whom the Tasmanian estate (with the exception of the sweep assets) are given, but only to take them away for the purpose of giving them to other persons, e.g., under clauses Y, Z, AA, CC, DD or FF. In accordance with this view of the nature of clause S, his Honour held that the undisposed of one-sixteenth of the proceeds of a winding up representing a deceased widow's share passed under the words of clauses S and T dealing with all the residue of personal estate in Tasmania.

It is now contended for the Hobart-property beneficiaries that the same reasoning necessarily applies to a widow's interest in profits (as distinct from proceeds of winding up) which has ceased owing to her death. In other words, it is said, clause S creates a true Tasmanian residue, and under clauses S and T the Hobart-property beneficiaries are entitled to receive any sweep interests which fail. whether those interests be interests in profits during the carrying on of the sweep or interests in corpus upon the winding up of the sweep.

The decision of Street J. upon this point relates only to proceeds of winding up and not to profits during the continuance of the business, and therefore it cannot be relied upon as res judicata in relation to the lapsed interest of a widow in profits. But it is argued for the Hobart-property beneficiaries that all parties are estopped in relation to this matter by way of issue-estoppel, for the reason that the decision of the learned judge necessarily involves the proposition that clause S creates a true Tasmanian residue. In

62 CLR 49562 CLR 496

A. result that a share of net profits which is released by the death of

a widow is given, but ineffectively given, to charities by clause FF. This share, therefore, in my opinion, passed directly to the provisions of clause S as Tasmanian residue, and not first to clause Z and then to clause S.

This view is important in relation to the agreements which have been made and to which it is now necessary to refer more in detail. Co. (LTD )

An agreement was made on 2nd April 1909 between the sweep beneficiaries, the trustees and the Hobart-property beneficiaries. John Coleman, described as representing the employees of the Tattersall's Sweep Consultation business, was also a party to the agreement. There is no evidence, however, that he was entitled to represent the persons who were then employed in the said sweep business, and there is no principle of law according to which he could bind future employees. Accordingly, his participation in the agree- ment cannot be regarded as effective to affect the interests of the employees. For the immediate present purpose, however, it is not necessary to refer further to this aspect of the agreement. The parties to this agreement sought to re-establish the trusts of the will in relation to the furtherance one-tenth SO far as the will authorized a distribution to charities. Clause 9 of the agreement authorized the trustees to stand possessed of the one-tenth of the net profits arising from or out of the carrying on of the said sweep business and in the said will of the said George Adams deceased referred to as 'The remaining one-tenth of the said net profits and of any part or parts of the said net profits which may for the time being for any reason be unapplied or undisposed of upon the trusts and to and for the ends intents and purposes for the furtherance of the said sweep business and for charities in the said will declared and set forth with respect to the same," and in accordance with certain arrangements made in March 1905 and January 1909 as to certain of the said profits. The clause also contained a declaration by the trustees that they would stand possessed of the one-tenth net profits in accordance with the direction already quoted. (The declaration by the trustees did not relate to any part of the profits unapplied. But the authority did relate to such parts.) By an agreement of 15th February 1912 an identical authority was given to the

62 CLR 497

trustees by W. J. Adams (who had acquired all the interests of the next of kin) and again by the Hobart-property beneficiaries. Thus, the sweep beneficiaries, the Hobart-property beneficiaries and the next of kin have all given an authority to the trustees in the terms stated.

The terms of this authority reproduce the words of clause Z of the will. Clark J. has interpreted this provision as applying to a lapsed widow's interest in net profits. In my opinion it does not

SO apply for reasons which I have stated, namely, that such an interest does not fall within the terms of clause Z of the will. His Honour declared that the agreement, while not effective as a dis- position of property, because it involved an accumulation of income prohibited by the Thellusson Act, nevertheless did operate as an authority to the trustees, SO long as it was unrevoked, to deal with the moneys to which it referred by applying them for furtherance purposes or for charities. Upon my view this authority does not extend to the lapsed widow's share of profits, and, accordingly, the order of Clark J. should in my opinion be varied by omitting the part thereof which declares that it does SO apply.

For the reasons which I have stated I am of opinion that the one- twentieth share of profits which would have been paid to the deceased widow had she continued to live should be paid as from the time of her death to the Hobart-property beneficiaries in the proportions set out in clause T of the will.

The next question which is raised upon the appeal relates to clause Z. It is contended that the Thellusson Act prohibits any accumulation of the furtherance one-tenth or of unapplied parts of net profits beyond twenty-one years from the testator's death. have already dealt with the contention that the order of Street J. established the validity of clause Z throughout the indefinite future and have stated the reasons which lead me to the opinion that the order did not have that effect. It thus becomes necessary to consider whether clause Z infringes the Thellusson Act.

In my opinion clause Z plainly directs an accumulation of income during an indefinite period. It cannot be defended as a direction for the maintenance as distinct from the extension and increase of what may be regarded as the capital asset of the sweep business SO

62 CLR 498

as to be protected by the principle of Vine v. Raleigh 1 See Hals. bury, Laws of England, 2nd ed., vol. 25, pp. 181, 182. It cannot be supported as making provision for reserve funds to meet depreciation, because the clause deals only with net profits, and in ascertaining net profits all proper reserves as well as current running expenses must necessarily have been allowed for and taken into account. The persons entitled to the profits of the business are not the same as the persons Co. (LTD.)

If clause S is not a true residue, even one with a limited operation, but a specific gift, the question of construction is ended for a specific gift cannot gather in another specific gift which has failed. By clause S the testator gave to his trustees 'all my real estate and all the residue of my personal estate of every kind and nature whatsoever in the State of Tasmania save and except the business as carried on by me at Hobart aforesaid as a conductor of sweep consultations and the goodwill and interest thereof." By clause T the testator declared that the trustees should stand possessed of the "last- mentioned real estate to convey the same to and of the personal. estate lastly hereinbefore bequeathed to them upon trust to divide" among certain persons (who have been called for convenience the Hobart beneficiaries). Then by various elaborate provisions the testator bequeathed the profits arising from the carrying on of the sweep business to certain persons and upon certain trusts and then disposed of the proceeds of the sweep business in the event of a realization by the trustees to certain persons. In my opinion, clause S has no operation as a residue at all but is a devise of specific realty and a bequest of specific personalty which, for the purposes of description, has been called " the residue' of personalty " save and except" the sweep business. There are several reasons for this conclusion on construction. At the outset, it should be borne

62 CLR 539

in mind that this is a mere question of intention. In Patching V. Barnett 1 Malins V.C. said It is almost in vain to cite authorities on the subject. The question is, what is the intention of the testator ? " The general tenor of all the provisions relating to the Tasmanian property indicates that the testator contemplated, for the purpose of disposition, a clear division of his property into two parts: (a) the sweep business, and (b) all the other property in Tasmania. The devise of realty and the bequest of the " residue " of personalty were made before the dispositions of the sweep business. It appears that by clause S and clause T the testator intended to dispose of everything except the sweep business, SO that he could then proceed to make the elaborate dispositions of that very con- siderable asset in his estate, the sweep business itself. The careful precautions (made by clauses CC and FF) against the lapsing of any share of the net profits is another indication of the testator's intention to remove the sweep business out of the dispositions of his other property finally and for all purposes. It seems to distort his intention to suppose that he gave all his Tasmanian property to the Hobart beneficiaries and excepted the sweep business merely for the purpose of making the other dispositions; SO that any lapsed gift of a share in the profits of the sweep business would fall back to the Hobart beneficiaries. Besides, the language of clause S lacks the indefinite and elastic character of a true residuary gift. The testator devised all his realty and bequeathed "the residue of my personal estate

save and except the business." These words are naturally descriptive of a definite quantity of assets equal to the difference between the whole of his Tasmanian property and that part of it described as the sweep business. In Page v. Leapingwell 2 a bequest of the "overplus moneys " after the payment of certain legacies out of a realization was held to be a specific gift even although the legacies were made to abate to enable the persons entitled to the "overplus" to rank pari passu. In the present case the context does not show that the word residue has been used to denote a true residue. Instances of contexts which denote a true residue are to be found in De Trafford v. Tempest 3 Cook V.

1(1880) 28 W.R. 886, at p. 889. 2(1812) 18 Ves. 463 [34 E.R. 392]. 3(1856) 21 Beav. 564 [52 E.R. 978]. 62 CLR 540

A further indication that the testator made a specific, not a residuary,

gift to the Hobart beneficiaries is seen in clause T. By that clause the testator declared that his trustees stand possessed of the real estate (devised to the trustees by clause S) to convey it to the Hobart beneficiaries and of "the personal estate" (bequeathed to the trustees in the terms "all the residue

save and except' by clause S) to divide it between the Hobart beneficiaries. This Co. (LTD.)

clause disposed of the beneficial interest in the Tasmanian realty and the "residue" of the personalty. The personal property to be divided is here referred to as ' the personal estate lastly hereinbefore bequeathed." words which reflect the intention of the testator in clause S to make a specific bequest. Moreover, the direction to divide the property seems, in the circumstances, to intend an immediate division of ascertained property, not of a residue for, if the testator intended a residue to be divided, one would expect. in view of the provisions authorizing the trustees to carry on the sweep business indefinitely, some reference postponing the time of division-at any rate as regards the sweep business, lapsed shares of which might not reach the residue for many years after his death. In my opinion, the testator intended the Hobart beneficiaries to get definite and circumscribed assets, and, having given them these, he proceeded to dispose of the sweep business to the sweep beneficiaries.

But is there any estoppel by reason of the decision of Street J. He decided (inter alia) :-(1) That the said accumulated funds SO far as are not employed for the furtherance of the sweep business follow the same destination as the net proceeds of such business on realization." (The destination is into the hands of the twelve legatees of the net profits and the widows of those who predeceased the testator for their lives). (2) That on the death of the widow, Emma Rooke, subsequent to a realization (the learned judge does not seem to have dealt with the contingency of a widow dying before realization) the one-twentieth share of the sweep business in which she took a life interest passed "under the gift in the said will of the residue of the testator's Tasmanian property." The decision regarding the accumulated funds construes the provisions of clause DD of the will as meaning that the balance, if any, of money which is left in the

Z fund at the date of realization is to be divided as indicated by

62 CLR 541

clause DD. Further, the decision was that, not any net profits, but the one-twentieth share in the sweep business, from which Emma Rooke derived net profits in her lifetime, passed on realization to the Hobart beneficiaries. Street J., therefore, decided the destination of certain shares of corpus. It would seem that the reason why the question relating to "the interests of the widows" was asked, and asked in a form limiting it to the disposition of the interests on realization, was that the testator had expressly intended to dispose of (by clause DD) the shares of corpus on realization to the "before- named legatees," but had neglected to provide in this clause for the contingency that one of these "before-named legatees" might predecease him SO that his share in the sweep business on realization became undisposed of by the clause.

The present questions, unlike those answered by Street J., relate to the destination of certain shares of income, namely, net profits. The decision, therefore, does not create an estoppel per rem judicatam. But, if it was an issue fundamental to his decision that clause S is a gift of the true residue for all purposes of the Tasmanian assets to the Hobart beneficiaries, then, any party bound by the decision would be estopped from denying that the lapsed shares of income passed as residue to the Hobart beneficiaries. In my opinion, the decision of Street J. does not necessarily rest on a finding that clause

S operates as a true residuary gift of the Tasmanian property for all purposes. It was alone fundamental to the decision that clause

S was a residue with an operation sufficient, and no more, to gather in the property which he allocated to it. And this might have been the basis upon which the learned judge reached his conclusion.

There have been many cases in which a residuary clause has been given a limited effect See Davers v. Dewes 1 Attorney-General V. Johnstone 2; Wainman v. Field 3. And in Blight v. Hartnoll 4 Fry J. stated: "I take the rule to be plain that in general the residuary gift carries every lapsed legacy and every legacy which on any ground fails to take effect, but that is subject to this other rule, that if the testator has shown some intention with regard to the excepted property inconsistent with its ever falling again into the

1(1730) 3 P. Wms. 40 [24 E.R. 96]. 2(1769) Amb. 577 [27 E.R. 373]. 3(1854) Kay 507 [69 E.R. 215]. 4(1883) 23 Ch. D. 218, at p. 220. 62 CLR 542

residue, effect must be given to that intention." Jessel M.R. 1

appears to have decided that in such circumstances there would be a true residue. But to speak of a residuary clause as having a limited effect may be a contradiction, but, if it is, it is a contradiction merely of terms it is not a legal impossibility for a testator to limit the operation of a residuary clause. It is clear that, if a testator intends that the residuary clause should gather in certain classes of Co. (LTD.)

failing gifts, but not others, he may achieve this intention by the appropriate language. Davers v. Dewes 2 is a case in which, as Fry J. said in Blight v. Hartnoll 3, "the testator has shown some intention with regard to the excepted property inconsistent with its ever falling again into the residue."

The decision of Street J. does not involve, then, as a decided issue fundamental to his decision, that clause S is a residuary clause which gathers in any more than the shares of corpus on realization: it does not involve that the clause gathers in lapsed shares of income, that is, net profits, yielded by the one-twentieth share while the business is still being carried on or of the amount of net profits accumulated in the Z fund at a time (before realization) after which the accumulation is declared void together with the one-tenth share of net profits (accruing thereafter until realization) directed by the will to be allocated to the fund. The only question which the decision necessarily settles is that clause S is a residue which draws in lapsed gifts of realized assets. Sweep business was, in my opinion, excepted by the testator for all purposes from clause S. Street J. might have faced, and accepted, this very position, and reached his decision that the lapsed shares of corpus on realization came within the description in clause S of " residue of my personal estate save and except the business " because, on realization, a lapsed share of corpus lost its character as an income-bearing share in the weep business and became a share of money, not having any special character and forming part of the Tasmanian assets. It is not necessarily involved in his decision that he deemed the clause a true residue of Tasmanian property for all purposes or wide enough, at least, to draw in a lapsed share of net profits in the sweep

1(1883) 23 Ch. D., at pp. 221-223. 2(1730) 3 P. Wms. 40 [24 E.R. 96]. 3(1883) 23 Ch. D., at p. 220. 62 CLR 543

business. The one-twentieth share of the net profits and the balance of the fund accumulated by virtue of clause Z and the one-tenth share of the net profits directed to be allocated to the fund should, in my opinion, pass as upon intestacy to the next of kin.

As stated above, the two lapsed shares of income, having the same character, should reach the same destination. It might be said that this is not SO and that one of the lapsed shares, namely, the fund accumulated by clause Z and the one-tenth share in the net profits, is disposed of by the provisions of clause DD. By this clause the testator directed that there be added to the net proceeds on realization for distribution to the "before-named legatees " "all moneys which may have accumulated in their hands under the trust in that behalf hereinbefore contained or SO much of such accumulations as shall not have been used or distributed as afore- said." In my opinion, no claim to the fund as it now stands or to the one-tenth share of the net profits can be based on clause DD. The clause merely provides for the addition to the net proceeds of sale of the moneys, if any, accumulated under clause Z and not spent at the time of winding up and realization.

It was contended that the decision of Street J. should be adopted

SO as to settle the lapsed shares of net profits because the decision has been acted upon for many years. The contention begs the question what is the matter as to which the decision of Street J. creates an estoppel.

With respect to the effect of the agreements, I concur in the observations of my brother Dixon and have nothing to add.

For these reasons, I am of opinion that, subject to the agreements, the balance of moneys standing in the fund created by clause Z and the one-tenth share in net profits from the carrying on of the sweep business directed by the will to be allocated to this fund pass as upon intestacy to the persons entitled to the interests of the next of kin; and that the one-twentieth share in net profits from the carrying on of the sweep business, which Emma Rooke enjoyed during her lifetime, has the same destination.

The appeal of the Perpetual Trustee Co. Ltd. and A. E. Blair and W. C. Adams should be allowed, and the order of Clark J. varied accordingly.

62 CLR 544

Subject to variations of order hereinafter set out, appeals

dismissed. Order of Clark J. varied by striking out in the answer to question 1 all the words from and including " Upon the true construction" to and including Emma Rooke for her life" and by substituting therefor the words 'Upon the true construction of the will of the testator the said one-twentieth share from and after the Co. (LTD.)

death of the said Emma Rooke on the 22nd March 1936 vested in the trustees mentioned in clause S of the said will or their successors upon the trusts declared in clause T thereof subject to any assignments encumbrances or other dispositions made by the persons or any of them beneficially entitled thereto." Order further varied by striking out in answer to questions 4 and 5 all the words from and including "That upon the true construction of the will" to and including "clause Z of the will" and by substituting therefor the following words: "That upon the true construction of the will of the testator the trusts expressed in clause Z of the will of the testator were valid for the period of twenty-one years from the date of the death of the testator but thereafter were invalid by reason of the Accumulation Act 1800 and that as from the expiration of twenty-one years from the date of the death of the testator upon the true construction of the said will the one-tenth of the net profits of the sweep consulta- tion business referred to in clause Z of the said will (including any accumulations thereof heretofore made) vested in the trustees mentioned in clause S of the said will or their successors upon the trusts declared in clause

T thereof subject to any assignments encumbrances or other dispositions made by the persons or any of them beneficially entitled thereto." Costs of the appeals of all parties as between solicitor and client to be paid out of the funds which are referred to in clause Z of the said will. Solicitors for the appellants, Finlay, Watchorn, Baker &Turner, A. B. &C. Crisp, Gill &Harvey and Simmons, Wolfhagen, Simmons &Walch.

Solicitors for respondents, Murdoch, Cuthbert &Clarke.