Duncan v Cathels - [1956] HCA 56

CATHELS AND OTHERS

RESPONDENTS.

ON APPEAL FROM THE SUPREME COURT OF Settlement-Construction--Trust--Absolute gift to eight children equally-Limita-

tions respecting three shares-Rule in Lassence v. Tierney.

By indenture of settlement a settlor, John Fenwick, who was married and had eight children, declared that he held his interest in a partnership business

UPON TRUST as to the three elevenths

for the benefit of " (his wife) for her life and after her death as to the said three elevenths and immedi- ately after the execution of these presents as to the remainder of the said interest UPON TRUST for such of " (his children) " as being males shall attain the age of twenty-one years or being a female shall attain that age or marry in equal shares subject to the provisions and powers hereinafter appearing." These powers and provisions related to the shares of only three children, Charlotte, Peter and Bisset. It was provided that Charlotte's share should be held upon trust with power to the trustees to convert and invest etc. for her for life, the annual income to be paid to her, and after her death in trust for her children as she should appoint, with other provision in default of appointment. It was then provided that " the said trust fund or the share thereof to which either of the said Peter Fenwick and Bisset Fenwick shall become entitled shall be held upon the same trusts for conversion and invest- ment as are hereinbefore declared with reference to the said Charlotte Fenwick

AND UPON FURTHER TRUST" to pay each of them the annual income until he should die or become bankrupt or cause the fund or income to be liable to be taken in execution or encumbered, with provision for any such happening; "PROVIDED ALWAYS that if and SO long as there is no person entitled to receive the said income of the shares of the said Peter Fen- wick and Bisset Fenwick respectively under the trusts hereinbefore declared the same shall be paid to the then survivors of (the settlor's children) in

98 CLR 626

equal shares." Bisset died unmarried, none other of the mentioned happen- ings having occurred. At his death there was still a child of the settlor then living. DUNCAN

Held 1 that there was an absolute gift of his share to Bisset in the first instance and that the case was one for the application of the rule in Lassence v. Tierney (1849) 1 Mac. &G. 551 [41 E.R. 1379].

2 that the proviso was capable of operating only during the period within which the preceding gifts of income might operate and in the events which happened it did not become operative.

Decision of the Supreme Court of New South Wales (Myers J.), reversed.

APPEAL from the Supreme Court of New South Wales.

The facts appear in the judgments hereunder. A. R. Moffitt Q.C. (with him I. Curlewis), for the appellant. This case is similar to Russell v. Perpetual Trustee…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Duncan v Cathels

Details

AGLC: Duncan v Cathels [1956] HCA 56
Case: [1956] HCA 56
Decision Date: 4 October 1956

CaseChat Overview and Summary

This case concerned an appeal from the Supreme Court of New South Wales regarding the construction of an indenture of settlement. The dispute centred on the beneficial interest in the share of Bisset Fenwick, one of the settlor's eight children, following his death unmarried and without issue. The appellant, an executor of Bisset's will, sought a declaration that Bisset's share was vested in his executors, while the respondent, Charlotte Dunkley, a surviving child of the settlor, cross-appealed seeking a declaration that she was solely entitled to the corpus of Bisset's share.

The primary legal issue before the court was whether the initial disposition of Bisset's share constituted an absolute gift, subject to subsequent limitations, or whether the limitations effectively prevented an absolute gift from arising in the first instance. This required the court to consider the application of the rule in *Lassence v. Tierney*, which addresses situations where an apparent absolute gift is followed by qualifying trusts. A secondary issue involved the interpretation and operative effect of a proviso concerning the distribution of income if no person was entitled to receive it under the preceding trusts.

The High Court of Australia, allowing the appeal and dismissing the cross-appeal, held that the indenture created an absolute gift of Bisset's share in the first instance, making the rule in *Lassence v. Tierney* applicable. The court reasoned that while the shares of Charlotte, Peter, and Bisset were subject to subsequent provisions, these provisions were engrafted onto initial absolute gifts. As Bisset's share was not affected by any of the specified events that would trigger the subsequent trusts (such as bankruptcy or alienation), and as the proviso regarding income distribution was confined to the period during which preceding income trusts could operate and did not become operative in the events that occurred, the initial absolute gift to Bisset remained effective. The court found that the trial judge had erred in concluding that there was no absolute gift in the first instance.

Consequently, the High Court ordered that Bisset Fenwick's share or interest under the settlement was now vested in the executors of his will. The costs of all parties for the appeal and cross-appeal were to be paid out of Bisset's share on a solicitor-and-client basis.

Orders