Duncan v Equity Trustees Executors & Agency Co Ltd

This case concerned an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria regarding the construction of the will of William James Woodmason. The dispute arose following the death of the testator's daughter, Phyllis Ada Bell Woodmason, who died unmarried and intestate. The plaintiff, Equity Trustees Executors and Agency Company Limited, sought to determine whether Phyllis's share of the residuary estate devolved as part of her own estate or whether it accrued to the shares of other beneficiaries under an accruer clause in the testator's will. The appellant, Alison May Duncan, representing certain grandchildren, argued that the accruer clause should operate.

The central legal issue before the High Court was whether the rule in *Lassence v. Tierney* (or *Hancock v. Watson*), which presumes an absolute gift takes effect where engrafted trusts fail, was excluded by the specific terms of the testator's will. The Supreme Court had held that the rule applied, meaning Phyllis's share devolved as part of her intestacy, and that the accruer clause did not operate. This decision was based on the finding that the trusts engrafted on Phyllis's initial absolute interest had failed, and that the accruer clause did not encompass such a failure.

The High Court determined that the rule in *Lassence v. Tierney* is merely a rule of construction that can be displaced by the clear terms of a will. It reasoned that the rule only applies when an absolute gift is made and subsequent trusts fail, and there is no provision for what should happen in that event. In this instance, clause 18 of the will expressly provided for the failure or determination of any trusts, directing that such shares should accrue to the other shares in the estate. The Court found that the failure of the trusts for Phyllis's children constituted precisely the event contemplated by clause 18, thereby excluding the operation of the *Lassence v. Tierney* rule and giving effect to the accruer clause.

Consequently, the High Court allowed the appeal, discharged the order of the Supreme Court, and declared that Phyllis Ada Bell Woodmason's share did not devolve as part of her intestacy. Instead, the Court ordered that her share was to be held upon trust and distributed according to the accruer provisions in clause 18 of the will, specifying the proportions in which it would accrue to the shares of the surviving daughters and grandchildren. The costs of the appeal were ordered to be paid out of the testator's estate.