Farrelly v Phillips
[2017] SASCFC 111
•30 August 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
In the Estate of MONICA GERTRUDE FARRELLY (DECEASED)
FARRELLY v PHILLIPS & ORS
[2017] SASCFC 111
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Nicholson)
30 August 2017
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION - GENERALLY
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - PARTICULAR TESTAMENTARY DISPOSITIONS - CLASS GIFTS
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - PARTICULAR TESTAMENTARY DISPOSITIONS - CONTINGENCY INVOLVING DEATH - DEATH COUPLED WITH CONTINGENCY - DEATH OF PERSON IN TESTATOR'S LIFETIME AND SUBSTITUTION
This is an appeal from a decision of a judge of the Supreme Court regarding the proper construction of a will.
In issue is whether, upon proper construction of the will, the children of the first cousins of the testatrix take the share of the residuary estate their parents stood to inherit, should they have survived the testatrix. The judge found that they did not.
Whether the testatrix’s objective intention was simply to give her residuary estate to such of her first cousins who might happen to survive her, or whether she intended to distribute the residue of her estate to the first cousins who survived her and to the children of those first cousins who did not survive her.
Held per Stanley J, dismissing the appeal, Kourakis CJ agreeing:
1. Clause 3(n) of the will is a class gift rather than a gift to individuals (at [53]).
2. Clause 4 is a substitution clause. In this case substitution is only effected by clause 4 in respect of persons who are members of the class. The class prescribed in clause 3(n) is established as at the date of death of the testatrix. It follows that there is no effective substitution in respect to those first cousins who died before the testatrix (at [57]).
3. Where a first cousin did not survive the testatrix, the potential share of that cousin is to be distributed amongst the first cousins who did survive, rather than any child or children of that cousin taking (at [57]).
Per Nicholson J (dissenting) at [74]:
1. Clause 4 of the will applies to extend the operation of clause 3(n) to encompass surviving children of the testatrix’s first cousins who had died before the date of the will and who had died between the date of the will and the date of the testatrix’s death.
Supreme Court Civil Rules 2006 (SA) r 206; Administration of Justice Act 1982 (UK); Wills Act 1936 (SA), referred to.
In re Coleman and Jarrom (1876) 4 Ch D 165, applied.
Loring v Thomas (1861) 1 Dr & Sm 497, distinguished.
Marley v Rawlings [2015] AC 129; Phillips v McCabe & Ors [2016] SASC 27; Perrin v Morgan [1943] AC 399; Fairbairn v Varvaressos (2010) 78 NSWLR 577; Perpetual Trustee Co Ltd v Wright (1987) 9 NSWLR 18; Muir v Winn [2009] NSWSC 857; Allgood v Blake (1873) LR 8 Ex 160; Boyes v Cook (1880) 14 Ch D 53; Byrnes v Kendle (2011) 243 CLR 253; National Bank of Australasia v Falkingham & Sons [1902] AC 585; Queensland Power Co Ltd v Downer EDI Mining Pty Ltd [2010] 1 Qd R 180; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; In re Smith’s Trusts (1877) 5 Ch D 497; Re McPherson (deceased) [1968] VR 368; Ive v King (1852) 16 Beav 46; In the matter of Porter’s Trust (1857) 4 K & J 188; Christopherson v Naylor (1816) 35 ER 693; In re Webster’s Estate; Widgen v Mello (1883) 23 Ch D 737; In Re Cornish (deceased) [1913] SALR 162; Kingsbury v Walter [1901] AC 187, discussed.
In the Estate of Josef Bernhard Nies (Deceased) [2014] SASC 93; State Trustees Limited v Edwards [2014] VSC 392; Fulton v Fulton [2014] NSWSC 619; Warton v Yeo [2014] NSWSC 494; Trenberth v Trenberth [2016] SASC 150; Fielder v Burgess [2014] SASC 98; Arnott v Kiss [2014] NSWSC 1385; Simic v NSW Land and Housing Corporation (2016) 339 ALR 200; Mackintosh v Gerrard [1947] AC 461, considered.
In the Estate of MONICA GERTRUDE FARRELLY (DECEASED)
FARRELLY v PHILLIPS & ORS
[2017] SASCFC 111Full Court: Kourakis CJ, Stanley and Nicholson JJ
KOURAKIS CJ: I would dismiss the appeal for the reasons given by Stanley J subject to the following additional reasons.
I would disregard the first draft will. It does not demonstrate knowledge of any relevant surrounding circumstance. The appellant relied on it to contend that the testatrix must have intended the substitutional gift clause in that draft to make an addition to the class of beneficiaries and that she must therefore have intended it to have the same meaning in the final will. That reasoning is not permissible.
Clause 4 of the will has work to do even if it does not apply to the general gift to cousins of the testatrix who survive her. I accept that the work left for it to do is surprisingly limited. However, it does not lead to any manifest absurdity.
The question of construction in this case can be approached in this way:
(a)a named person, to whom a testamentary gift is made without a qualification, is a beneficiary;
(b)a named person, to whom a testamentary gift is made on the condition that he or she survives the testatrix, is not a beneficiary if he or she does not survive the testatrix;
(c)a testamentary gift to a class of persons who are not named but are instead identified by reference to their relationship to the deceased or another characteristic is generally a reference to living members of that class at the time of making of the will and deceased members of that class are therefore not beneficiaries;
(d)a testamentary gift to a class of persons, defined in part by reference to them surviving the testatrix, is not a gift to a person who would otherwise be a member of the class but has predeceased the testatrix;
(e)there is no reason in this case to give the word ‘beneficiary’ in clause 4 of the will any meaning other than its natural and obvious meaning.
It follows that the gift of equal shares in the residuary estate to “those of the children of the deceased brothers and sister of both my late mother and father who survive me” is not a gift to those cousins who died before the making of the will, or to those who were alive then but predeceased the testatrix, and therefore they are not beneficiaries for the purposes of clause 4 of the will.
STANLEY J.
Introduction
This is an appeal from a Judge of this Court in relation to the construction of the last will and testament of the deceased, Monica Gertrude Farrelly (the testatrix).
The first respondent, Vikki Marie Phillips, as executor of the will, brought an application pursuant to 6SCR 206 seeking the determination of questions arising in an action for administration. For the purposes of this appeal the questions concerned the construction of clauses 3(n) and 4 of the will. At issue is whether, where the testatrix’s first cousins predeceased her, their children take the share of the residuary estate their parents stood to inherit.
Factual background
The testatrix was born on 16 April 1914. Her last will was made on 4 April 2003, just prior to her 89th birthday. She died a spinster on 19 June 2012 at Mallala in South Australia at the age of 98. Probate was granted to the first respondent on 2 November 2012. The testatrix’s estate was substantial, being valued in excess of $7 million at the time probate was granted.
The testatrix was one of two children. Her sister and parents had died before she made her last will. Her sister died without issue.
The testatrix had a large extended family. Her father had six siblings, five of whom had issue. Her mother had 11 siblings, four of whom had issue. The testatrix’s uncles and aunts had all died by the time she made her last will.
Accordingly, at the time the testatrix made her last will her closest relatives were first cousins. Some of those cousins were alive, while others had died with issue.
Before the trial judge, there was limited evidence of the testatrix’s state of knowledge of her extended family at the time she made her will, including whether she was aware of how many first cousins she had, their ages, whether they were still alive and, of those who had died, whether they had left issue.
As I say, at issue before the judge, and on appeal, is whether children of the cousins of the testatrix who had predeceased her take under her will. The judge found they did not.
The appeal is brought by a child of one cousin of the testatrix who had predeceased her, on behalf of that class of descendants excluded from the will by the construction adopted by the judge. The class of cousins who the judge found to be beneficiaries under the will did not seek to be heard on this appeal to keep amity in the family and reduce costs.
The appeal turns on a short but difficult question of construction.
It is convenient to commence with a consideration of the relevant terms of the will.
The will
I set out clauses 3 and 4 of the will:
3.I GIVE the whole of my estate to my trustees UPON TRUST to sell call in and convert the same into money with power in their discretion to postpone such sale calling in and conversion for so long as they in their discretion think fit and after paying all my debts funeral and testamentary expenses TO HOLD the balance as follows:
(a) AS TO the sum of TWENTY THOUSAND DOLLARS ($20,000.00) for my late sister’s step-daughter VIOLET MARTHA PHILLIPS of Unit 5 27 Daws Road Mitchell Park in the said State
(b) AS TO the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) for the said VIKKI MARIE PHILLIPS if she survives me but if she has predeceased me then for her son COREY VICTOR PHILLIPS if he survives me and attains his majority
(c) AS TO the sum of TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000.00) for the said COREY VICTOR PHILLIPS subject to him attaining the age of twenty five (25) years and until that time I direct my trustees that such sum shall be invested and the income arising therefrom may be paid to COREY for such purposes as my trustees in their absolute discretion think fit
(d) AS TO the sum of TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000.00) for the said MARY FRANCES CAINS if she survives me but if she has predeceased me then in equal shares as tenants in common for those of her children JAMES and CHRISTINE who survive me and attain their majority
(e) AS TO the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) EACH for those of the following who survive me
(i)GERALD FREDERICK McCABE
(ii)RAYMOND MICHAEL McCABE
(iii)MAURICE JAMES McCABE
(iv)JOSEPH DONALD McCABE and
(v)CHRISTOPHER JOHN McCABE
the sons of my late mother’s brother FREDERICK
(f) AS TO the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) for NICHOLAS McCABE the son of the abovenamed GERALD McCABE
(g) AS TO the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) for TERRY JOHNSON if she survives me
(h) AS TO the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) to be invested by my trustees for the purpose of applying both the capital and income at the discretion of my trustees for the up keep and maintenance of the family graves at Pinkerton Plains
(i) AS TO the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) for ST MALACKYS CATHOLIC CHURCH at Mallala to be used for such general purposes of the Church as shall be approved by my trustees
(j) AS TO the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) for ST MARY’S CABRA SCHOOL at Clarence Park to be used for such general purposes as the trustees or directors thereof shall think fit
(k) AS TO the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) for XAVIER COLLEGE of Kentish Road Gawler Belt to be used for such general purposes as the trustees or directors thereof shall think fit
(l) AS TO the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) for CALVARY HOSPITAL to be used for such general purposes as the trustees or directors thereof shall think fit
(m) the sum of THREE THOUSAND FIVE HUNDRED DOLLARS ($3,500.00) to be set aside by my trustees for the purpose of contribution towards the funeral expenses of my friend KATHLEEN WILLIAMS if she survives me
and
(n) all the rest and residue in equal shares as tenants in common per capita for those of the children of the deceased brothers and sisters of both my late mother and father who survive me.
4.IF any beneficiary under my will does not survive me or if it should be uncertain as to whether such beneficiary did survive me but leaves surviving a child or children who shall be living at the date of my death and attain majority I DIRECT that such child or children shall take and if more than one in equal shares as tenants in common the share under this my will which his her or their parent otherwise would have taken.
It can be seen that clause 3 of the will provides for the division of the estate. It consists of 14 sub-clauses making various gifts. There are 13 specific bequests and clause 3(n) provides for the residuary estate. A number of sub-clauses require the intended recipients to survive the testatrix. Other sub-clauses do not require the intended recipients to survive the testatrix. One sub-clause requires the intended recipient to attain the age of 25 years prior to receiving a legacy. Seven sub-clauses provide for a specific gift to a person or persons. Two of those sub‑clauses provide for the vesting of the gift in another person in the event that the named recipient does not survive the testatrix. Four sub-clauses provide gifts to institutions. Another sub-clause provides contribution towards satisfaction of some financial expenses for a named friend, should the friend survive the deceased.
Reasons of the judge
The judge held that clause 4 operates as a substitution of beneficiary provision. He held clause 4 did not operate in respect of the gift contained in clause 3(n). As a result, the surviving children of the first cousins of the testatrix who predeceased her are excluded from taking under the will. The residuary estate, which is in excess of $4 million, is left to the first cousins of the testatrix who were living at the date of her death.
The judge held that clause 3(n) is expressed to provide a gift to a class of persons by reference to their relationship with the testatrix, rather than to individuals. His Honour held that membership of the class was to be ascertained at the date of the testatrix’s death. As clause 4 operates as a substitutional clause rather than an independent or original gift, the clause operated only in respect of beneficiaries who were the original legatees.
His Honour held that the phrase “who survive me” makes clear that the testatrix intended to create a class gift to all of her first cousins and, if any of them died in her lifetime, she intended that the survivors would take. That class is the testatrix’s first cousins who survive her. His Honour said:[1]
Clause 3(n) expressly recognises that the deceased’s mother and father have predeceased. Further, it recognises that their brothers and sisters have predeceased. The words “who survive me” can only refer to the children of the deceased brothers and sisters of the deceased’s mother and father. As a consequence, only those children who survive the deceased fall within the class for the purposes of clause 3(n) and thus the term “beneficiaries” in clause 4. The first cousins who predecease do not take a share of the class gift and, as such, are not beneficiaries to the will.
[1] Phillips v McCabe & Ors [2016] SASC 27 at [23].
His Honour found:[2]
It is my view that this interpretation is the most likely to accord with the deceased’s intention. Given the size of the deceased’s family and, in particular, the second group of beneficiaries, it seems unlikely that the deceased would intend for her will to be extended to that second group without her, or her solicitors, considering the inherent difficulties with such a gift. There is no evidence of such consideration in the solicitors’ file. Further, there is no logical basis for the deceased to distinguish the children of first cousins who died prior to her making the will. If the deceased intended to provide equally for each cousin, or their issue in their stead, the deceased would likely have provided for the children of the first cousins who had died before she made her will.
[2] Phillips v McCabe & Ors [2016] SASC 27 at [24].
Principles of construction of wills
The task of a court when construing a will is to discover the intention of the testator. In Perrin v Morgan,[3] Lord Romer said:
I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made.
[3] [1943] AC 399 at 420.
Lord Simon said:[4]
… [t]he fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case – what are the “expressed intentions” of the testator.
[4] [1943] AC 399 at 406.
In Fairbairn v Varvaressos[5] Campbell JA cited with approval the dicta of Bryson J in Perpetual Trustee Co Ltd v Wright,[6] where his Honour said:[7]
… one’s task is, first, if it be possible, to ascertain, what was the basic scheme which the deceased had conceived for dealing with his estate, and, then, so to construe the will as, if it be possible, to give effect to the scheme so revealed.
[5] [2010] NSWCA 234, (2010) 78 NSWLR 577.
[6] (1987) 9 NSWLR 18 at 33.
[7] [2010] NSWCA 234 at [19], (2010) 78 NSWLR 577 at 581-582.
In Muir v Winn[8] Bryson AJ observed:[9]
It is necessary to seek to understand the scheme of a testator’s dispositions. Where the terms of the will are perfectly clear search for the scheme may be of little use, but where the language is obscure or the effects of the literal reading and the reasoning impliedly underlying it are startlingly unlikely, as in this case, the scheme of dispositions is very important.
[8] [2009] NSWSC 857.
[9] [2009] NSWSC 857 at [24].
The appellant seeks to rely upon the so-called “armchair principle”. This was described in Allgood v Blake[10] by Blackburn J as follows:[11]
The general rule is that, in construing a will, the Court is entitled to put itself in the position of the testator, and to consider all material facts and circumstances known to the testator with reference to which he is to be taken to have used the words in the will, and then to declare what is the intention evidenced by the words used with reference to those facts and circumstances which were (or ought to have been) in the mind of the testator when he used those words … the meaning of words varies according to the circumstances of and concerning which they are used.
[10] (1873) LR 8 Ex 160.
[11] (1873) LR 8 Ex 160 at 162.
There are two qualifications to the armchair principle. First, when the court considers the circumstances known to the testator, it is only the circumstances existing at the time the testator made his will that may be considered.[12] Second, extrinsic evidence cannot be used to make words in a will bear a meaning which on the face of the will they are incapable of conveying. This is sometimes described as the “incapable meaning rule” or the “plain meaning rule”.[13] In relation to the armchair principle, Lord Romer observed in Perrin v Morgan,[14] that when seated in the armchair the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he plainly said.
[12] Boyes v Cook (1880) 14 Ch D 53 at 56.
[13] See Theobald on Wills (17th Ed, 2010, Sweet and Maxwell / Thomson Reuters at 279).
[14] [1943] AC 399 at 420.
In Marley v Rawlings,[15] the Supreme Court of the United Kingdom has recently approached the construction of wills on the same basis as the interpretation of contracts. The Court adopted the objective theory to ascertaining the testator’s intention, which it found to be consistent with the armchair principle. Lord Neuberger, with whom Lord Clarke, Lord Sumption and Lord Carnwath agreed, said:[16]
When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd, “No one has ever made an acontextual statement. There is always some context to any utterance, however meagre.” To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan that “courts will never construe words in a vacuum”.
Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts: see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd.
...
[T]he approach to the interpretation of contracts ... is therefore just as appropriate for wills as it is for other unilateral documents. This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th ed (2010), chapter 15 and the recent supplement supports such an approach as indicated in Royal Society for the Prevention of Cruelty to Animals v Sharp. Indeed, the well known suggestion of James LJ in Boyes v Cook that, when interpreting a will, the court should “place [itself] in [the testator’s] arm-chair”, is consistent with the approach of interpretation by reference to the factual context.
[Citations omitted].
[15] [2014] UKSC 2, [2015] AC 129.
[16] [2014] UKSC 2 at [20]-[21], [23], [2015] AC 129 at 144-145.
Marley v Rawlings has been applied in a number of single judge decisions in Australia.[17]
[17] In the Estate of Josef Bernhard Nies (Deceased) [2014] SASC 93 at [14]; State Trustees Limited v Edwards [2014] VSC 392 at [138]; Fulton v Fulton [2014] NSWSC 619 at [203]; Warton v Yeo [2014] NSWSC 494 at [50]; Trenberth v Trenberth [2016] SASC 150 at [94]; Fielder v Burgess [2014] SASC 98 at [42]; Arnott v Kiss [2014] NSWSC 1385 at [27].
This approach is conducive to coherence in the law of construction of instruments consistent with the approach taken in the joint reasons of Heydon and Crennan JJ in Byrnes v Kendle.[18]
[18] [2011] HCA 26 at [95]-[116], (2011) 243 CLR 253 at 282-291.
While the task of the Court in construing the will is to ascertain the intention of the testatrix, the Court must take care to avoid interpreting the will on the basis of some a priori assumption about the testatrix’s intentions. The surest guide to the testatrix’s intention is the language of her will. Her expressed intentions are embodied in its text read in light of the surrounding circumstances in accordance with the armchair principle. The search is for her expressed intentions,[19] not what she meant to say, but what she actually said.[20]
[19] Perrin v Morgan [1942] AC 399 at 406.
[20] Simic v NSW Land and Housing Corporation [2016] HCA 47 at [18], (2016) 339 ALR 200 at 206.
In that context, a question arises as to whether, in construing the will, the Court can have regard to earlier drafts of the will. In my view it is open to the Court to consider evidence of earlier drafts of the will in order to assist in ascertaining the testator’s expressed intention. I consider that such evidence is admissible as part of the surrounding circumstances. While it was once the case at common law that evidence of draft contracts was not admissible for constructional purposes,[21] that no longer appears to be the position. In Royal Botanic Gardens and Domain Trust v South Sydney City Council[22] the High Court had regard to various drafts of a deed that passed between the parties in order to construe the concluded deed. The drafts were admitted as evidence of surrounding circumstances.
[21] See National Bank of Australasia v Falkingham & Sons [1902] AC 585 at 591 followed in Queensland Power Co Ltd v Downer EDI Mining Pty Ltd [2010] 1 Qd R 180 at [70].
[22] [2002] HCA 5 at [26], [30], (2002) 240 CLR 45 at 58, 60.
In accordance with the approach in Marley v Rawlings[23] the Court should apply those principles applicable to the construction of contracts to the construction of a will for the purposes of ascertaining the expressed intention of the testator. In Marley v Rawlings[24] Lord Neuberger said it was open to the court to consider evidence of drafts of a will which the testator may have approved or caused to be prepared for the purposes of interpreting the will or a provision of the will.[25] However, his Lordship reached that conclusion on the basis of an express statutory provision in the Administration of Justice Act 1982 (UK) which permitted the court to receive extrinsic evidence of the testator’s intention to assist in interpretation. No equivalent provision is to be found in the Wills Act 1936 (SA). Nonetheless, notwithstanding the absence of an equivalent statutory provision I am satisfied that it is permissible to receive draft wills as evidence of surrounding circumstances for the purposes of ascertaining the testator’s expressed intention. In Byrnes v Kendle[26] Heydon and Crennan JJ held that evidence of pre-contractual negotiations is admissible for the purpose of drawing inferences about what the contract meant where it demonstrates knowledge of surrounding circumstances. In relation to the constitution of wills, that would require, however, evidence that the draft will was approved by the testator or that the testator caused the draft to be prepared in particular terms so as to throw some light on his intention. So the evidence of draft wills, like pre-contractual negotiations, is only admissible where it demonstrates knowledge of surrounding circumstances.
[23] [2014] UKSC 2, [2015] AC 129.
[24] [2014] UKSC 2, [2015] AC 129.
[25] [2014] UKSC 2 at [26], [2015] AC 129 at 145.
[26] [2011] HCA 26 at [98], (2011) 243 CLR 253 at 284.
The appellant’s submission
The appellant submits that clause 4 of the will is an independent gift not a substitutionary provision and the judge erred in finding to the contrary. The appellant submits the judge erred in finding that clause 4 did not operate in respect of the gift contained in clause 3(n). The appellant submits that this construction is stronger in relation to the children of the first cousins who were alive when the will was made but died before the testatrix, than the children of those cousins who had died before the will was made. The appellant relies upon the history of the making of the will and its text.
The will went through a series of drafts. However, the terms of clause 4 were unchanged from the first draft to the executed will. In the first draft clause 3 provided as follows:[27]
[27] For the purposes of easier comprehension I have paraphrased slightly the terms of clause 3.
(3) UPON TRUST to hold as follows:
(a) $20,000 for Vi.
(b) $200,000 for Vicki if she survives me but if she has predeceased me for Corey if he survives me and obtains his majority.
(c) $250,000 for Corey if he survives me and attains his majority.
(d) $100,000 for Mary if she survives me but if she has predeceased me then to those of James and Christine to survive me and attain their majority.
(e) $100,000 for Saint Malackys Catholic Church for upkeep of family graves.
(f) $200,000 for Saint Malackys Catholic Church for its general purposes.
(g) $2,500 for Kathleen Williams for her funeral if she survives me.
(h) all the rest and residue in equal shares as tenants in common for those of my late mother’s brothers and sisters and my late father’s sisters and brothers who survive me.
The subjects of the residual gift in clause 3(h) were the testatrix’s uncles and aunts. It appears that gift was drafted in error. By 2003, they all had died. In subsequent drafts the residue is gifted not to the uncles and aunts but to the first cousins who are referred to as “those of the children of the deceased brothers and sisters of both my late mother and father who survive me”.
The appellant submits that the terms of the first draft, excluding the erroneous reference to uncles and aunts rather than first cousins in clause 3(h), requires a constructional choice to be made as to the meaning of the expression “any beneficiary” in clause 4 of the will. In the first draft that constructional choice is between, on the one hand, Vi solely, as in clause 3(a), and on the other hand, each and every person who was the primary object of the testatrix’s bounty, as in clause 3(a), (b), (c), (d) and (g). The appellant contends the testatrix must have meant the latter rather than the former because if the former had been the intention it would have been simpler and clearer in clause 4 to have referred solely to Vi not surviving the testatrix rather than “any beneficiary”. In these circumstances it would be such a peculiar thing to refer to “any beneficiary” if there was only one beneficiary, namely Vi, being referred to, as to preclude that construction being adopted. The appellant submits that, as that drafting scheme was maintained in subsequent iterations, in particular the executed will, the Court should construe clause 4 as extending the beneficiaries under the will to the children of those who do not survive, including the children of the first cousins who are intended to share in the residuary estate in accordance with clause 3(n).
I come to the appellant’s textual analysis. The appellant submits there is no grammatical reason why clause 4 cannot apply to clause 3(n). It can apply to any gift to a natural person. It should be interpreted as applying to every first cousin whether alive or not at the date of the will or at the date of the testatrix’s death. The reference in clause 4 to “beneficiary” means any natural person named or described in the will as the intended recipient of a bequest. This includes the persons described in clause 3(n) who are the testatrix’s first cousins. On that basis, clause 4 would apply to first cousins who had died before the date of the will and first cousins who had died between the date of the will and the date of the testatrix’s death. The words in clause 4 “the share ... which his her or their parent otherwise would have taken” extend the class created by clause 3(n). Those words indicate that clause 4 is an independent gift, not a substitutionary provision.
The appellant submits that this construction should be adopted as it avoids the risk of intestacy in respect of the residuary estate if all the testatrix’s first cousins predeceased her or the prospect that if only one or two survived her they would receive a windfall far in excess of any specific bequest made by the testatrix. The appellant submits that neither outcome is likely to have been intended by the testatrix. On the contrary, the appellant submits the testatrix would have wanted to benefit a broad group of her relatives, including the children of any first cousin who predeceased her.
The appellant relies upon the reasons of Jessel MR in In re Smith’s Trusts.[28] In that case, the testatrix made a will providing that any money at her death should be divided equally amongst her brothers and sisters and, should any of her brothers or sisters be dead, their share was to be equally divided amongst their children. Jessel MR said:[29]
The question is, whether I am to attribute to this testatrix the capricious intention that, if a brother died before her will, his children should not take, but that, if a brother died after her will, his children should take. I am of opinion that I am not bound to do anything of the sort. She gives her money to be equally divided amongst her brothers and sisters, and then she says, “should any of her brothers and sisters be dead, their share is to be equally divided amongst their children.” The words “their share” cannot mean a share given to a brother or sister who is dead, because you cannot give a legacy to a dead person, as the testatrix must have known; and consequently “their share” must mean “the share which they would if living have taken.” Therefore I hold that the children of the brother who was dead at the date of the will are entitled to a share.
[28] (1877) 5 Ch D 497.
[29] (1877) 5 Ch D 497 at 498.
Substitutional or independent gifts?
Whether a clause in a will is classified as making a substitutional or original gift can often turn on very slight differences in language.[30]
[30] Mackintosh v Gerrard [1947] AC 461 at 474.
In Re McPherson (deceased),[31] the Victorian Supreme Court considered a residuary gift to “all my children who shall survive me in equal shares”, where the testatrix directed that “if any of my children ... shall pre-decease me leaving children him or her surviving ... such children shall take and if more than one in equal shares the share to which his or her or their parent would have been entitled had he or she or they survived me”. Adam J said:[32]
The problem which arises from this form of disposition is whether what is in form a substitutionary gift in favour of children of the primary beneficiaries is merely by way of substitution, or whether it should be construed as giving an independent gift to the children contingently upon their parents pre-deceasing the testatrix and regardless of whether their parents could have taken under the primary disposition.
[31] [1968] VR 368.
[32] [1968] VR 368 at 369.
In the case of substitutional provisions, the applicability of the substitutional gift is often framed as depending on the manner in which the class gift is described. In Ive v King,[33] Sir John Romilly drew the following distinction:[34]
The distinction which is to be found in cases of this description is to this effect: if a testator gives a legacy to a class of persons, such as the children of A, and goes on to provide, that in case of the death of any one of the children of A before the period of distribution, the issue of such child shall take their parents’ share, such issue cannot take, unless the parent might have taken; and consequently, if a child of A be dead at the date of the will or at the death of the testator, the issue of that child cannot take anything.
[33] (1852) 16 Beav 46.
[34] (1952) 16 Beav 46 at 53.
This distinction was described in In the matter of Porter’s Trust,[35] by Page Wood VC in the following terms:[36]
... [T]he principle of that distinction being that, to determine whether such gifts are to take effect, the test in the case of a legacy to a class must necessarily be this, was the deceased, whose supposed share is claimed, or was he not, ever a member of the class; in other words, was he or was he not ever an object of the gift? If he was not, there can be no substitution.
[35] (1857) 4 K & J 188.
[36] (1857) 4 K & J 188 at 192-193.
The principle, as stated in In the matter of Porter’s Trust, can be traced to Christopherson v Naylor[37] which concerned a will under which a testator bequeathed legacies “to each and every child of my brothers and sisters ... who shall be living at the time of my decease ...”, and which contained a substitutional provision that provided that: “But if any child or children of my said brother and sisters or any of them ... shall happen to die in my lifetime and leave any issue ...” in such case the legacies “intended for such child or children so dying shall be upon trust for, and I give and bequeath the same to his, her or their issue; such issue taking only the legacy or legacies which his, her, or their parent or parents would have been entitled to, if living at my decease”. Sir William Grant MR held that the substitution clause in that case was ineffective:[38]
The nephew and nieces are, here, the primary legatees. Nothing whatever is given to their issue, except in the way of substitution. In order to claim, therefore, under the will, these substituted legatees must point out the original legatees in whose place they demand to stand. But, of the nephews and nieces of the testator, none could have taken besides those who were living at the date of the will. The issue of those who were dead at that time can, consequently, shew no object of substitution; and to give them original legacies would be, in effect to make a new will for the testator.
[37] (1816) 35 ER 693.
[38] (1816) 35 ER 693 at 695.
Christopherson v Naylor was considered further in In re Webster’s Estate; Widgen v Mello,[39] where Kay J said:[40]
The law was settled long ago in the case of Christopherson v Naylor. There a rule was laid down that where there is a gift to a class and then a substitutionary gift of the share of any one of the class who should die in the lifetime of the testator, no one can take under the substitutionary gift who is not able to predicate that his parent might have been one of the original class, and consequently if the parent was dead at the date of the will, and therefore by no possibility could have taken as one of the original class, his issue are not able to take under the substitutionary gift.
[39] (1883) 23 Ch D 737.
[40] (1883) 23 Ch D 737 at 739.
However, the law as stated in Christopherson v Naylor was distinguished in Loring v Thomas.[41] The rule in Loring v Thomas was discussed in In Re Cornish (deceased),[42] by Murray J as follows:[43]
The principle of that case is that if you have an original gift in a will to a class of persons to be ascertained at the death of the testator, and a subsequent provision in favour of issue which is not properly speaking a substitutional gift but makes an addition to the class of persons taking under the original gift by reference to the issue of members of the class who were dead at the date of the will, then the persons to take under the original gift will include such issue. Each case depends on the language used by the testator. The subsequent gift must be expressed widely enough to create an independent gift to the issue of members of the class dead at the date of the will.
[Citations omitted].
[41] (1861) 1 Dr & Sm 497.
[42] [1913] SALR 162.
[43] [1913] SALR 162 at 166.
Murray J’s analysis emphasises the importance of the precise language employed by the testator.
Consideration
It is a difficult question of construction as to whether the testatrix’s objective intention was simply to give her residue to such of her first cousins who might happen to survive her or whether she intended to distribute the residue of her estate to those first cousins who survived her and to the children of those first cousins who did not survive her.
Much of the appellant’s submissions are based in arguments about what the testatrix could have said but did not say. The issue of constructional choice is to be answered by reference to what she actually said in her will.
There is no extrinsic evidence available which can assist in ascertaining which choice the testatrix intended to make. As the judge found, the evidence of the testatrix’s knowledge of her family was not extensive, although there was some evidence that she was interested in her first cousins. That evidence does not assist in the constructional choice. Neither does the evidence of the draft wills. While that evidence is admissible where it demonstrates knowledge of surrounding circumstances for the purpose of the armchair principle, the terms of the first draft relied upon by the appellant do not evince an intention on the part of the testatrix to vest the residue of her estate on first cousins who survive her as well as children of those cousins who do not survive her, rather than only on her first cousins who survive her. The inference for which the appellant contends based on the failure to refer to Vi in clause 4, is not compelling even considered in isolation. The inference is further weakened by the subsequent changes made to clause 3, culminating in the executed will, where some bequests are made to individuals on the basis of survivorship and others are not, and where specific provision sometimes is made for who takes the specific bequest if the beneficiary does not survive. Sitting in the position of the testatrix, and considering all the material facts and circumstances known to her at the time she made her will, does not throw any real light on the constructional choice to be made. Neither is the answer to ascertaining the testatrix’s testamentary intention to be found in making any assumption as to what she wanted. In this case given the absence of any extrinsic evidence which would assist in ascertaining the particular constructional choice with which the Court is faced, the testatrix’s testamentary intention must be found in the language of the will.
It is clear that clause 3(n) of the will is a class gift rather than a gift to individuals. The judge was correct to so construe it. A class gift is where the beneficiaries are identified not by name but by general description, such as a term of relationship.[44] In Kingsbury v Walter,[45] Lord Macnaghten said:[46]
When there is a gift to a number of persons who are united or connected by some common tie, and you can see that the testator was looking to the body as a whole rather than to the members constituting the body as individuals, and so you can see that he intended that if one or more of that body died in his lifetime the survivors should take the gift between them, there is nothing to prevent your giving effect to the wishes of the testator. I think this is a gift to a class ... I think it is pretty plain that the testator made one class of all his nephews and nieces, and intended that if any of them died during his lifetime the survivors should take.
[44] Kingsbury v Walter [1901] AC 187 at 192.
[45] Kingsbury v Walter [1901] AC 187.
[46] Kingsbury v Walter [1901] AC 187 at 191.
Where a class gift is made and a person who is a member of the class pre‑deceases the testator, the gift to that person passes to the surviving members of the class.[47] Membership of the class in clause 3(n) is to be determined as at the date of the death of the testatrix. Where a class gift is immediate in its operation, the class closes at the date of the testator’s death.[48] Prima facie the class consists of those members (if any) existing, ascertainable and capable of taking at the death of the testator.[49]
[47] In re Coleman and Jarrom (1876) 4 Ch D 165 at 169-170.
[48] Haines Construction of Wills in Australia at [19.16].
[49] Williams on Wills at [66.5].
Further, the judge was correct in holding that the class consisted of all of the testatrix’s first cousins who survived her. In my view that is the proper construction given the definition of the class by reference to the phrase “who survive me”. The significance of that phrase is that it makes tolerably clear the intention of the testatrix that where a first cousin did not survive her, his or her share would be taken by those first cousins who did survive her. That is the work to be performed by the phrase. It must relate to the first cousins because, as the judge pointed out, clause 3(n) expressly recognises that the testatrix’s parents and uncles and aunts were all deceased at the time she made her will. That being so, if a first cousin pre-deceased the testatrix they did not become a beneficiary for the purposes of clause 4. In those circumstances I consider clause 4 is substitutional. It is intended to give the child or children only the parent’s share in the event that the parent would have been entitled to a share of the testatrix’s bounty pursuant to clause 3(n). That only occurred if the parent, who was a first cousin of the testatrix, survived her. If the first cousin did not survive the testatrix, clause 4 cannot operate to substitute the child or children of the deceased first cousin because there is in fact no share to be given to the children, instead of the parent, as the parent is not a beneficiary because the parent did not survive the testatrix. This analysis underlines the importance of the language of “beneficiary” employed by the testatrix in clause 4 of her will. As the judge identified, clause 4 only operates to substitute the child or children to take the parent’s share of the residuary estate if the parent was entitled to benefit from the residuary estate, and that required the parent to survive the testatrix.
In other words, as the gift in clause 3(n) is to a class living at the testatrix’s death and clause 4 is expressly confined to the children of a beneficiary under her will, the substitution provided for in clause 4 is of no effect with regard to anyone who did not ever become a member of the original class because membership was conditioned on survivorship.
Consistent with the reasoning in In the Matter of Porter’s Trust[50] substitution is only effected by clause 4 in respect of persons who are ascertained as members of the class established by clause 3(n) and capable of taking under that primary gift. So there is no effective substitution in respect to those first cousins who died before the testatrix, whose death is the reference point by which the class established by clause 3(n) is to be ascertained. There is nothing capricious about the result of adopting this construction. The residue of the estate is to be shared amongst only those first cousins who survived the testatrix. Where a first cousin did not survive the testatrix, the potential share of that cousin is distributed amongst the first cousins who did survive, rather than any child or children of that cousin taking. That reflects a rational choice made by the testatrix.
[50] (1857) 4 K & J 188 at 192-193.
This is, to adopt the words of Adams J in Re McPherson,[51] a Christopherson v Naylor[52] case not a Loring v Thomas[53] case. In Re McPherson a testatrix gave the residue of her estate to “all my children who shall survive me in equal shares”, and directed that “if any of my children … shall predecease me leaving children him or her surviving … such children shall take and if more than one in equal shares the share to which his or her or their parent would have been entitled had he or she or they survived me”. One child of the testatrix died many years prior to the making of the will leaving surviving her son who also survived the testatrix. Adams J held that this grandson did not take under the residuary clause because the expression “if any of my children … shall predecease me” referred to the testatrix’s children who were alive when the will was made and did not include the child who died earlier. Adams J found that this was a true substitutionary clause, substituting “their children” only for parents who were capable of taking under the will and was not a clause conferring an original gift on the grandson independently of any share intended for his mother.
[51] [1968] VR 368 at 373.
[52] (1816) 35 ER 693.
[53] (1861) 1 Dr & Sm 497.
Conclusion
I would dismiss the appeal.
NICHOLSON J.
I have had the advantage of reading in draft the judgments of Stanley J and the Chief Justice. I agree with and am grateful for the factual background, the summary of the will, the summary of the reasons of the Judge at first instance and, in large part, the principles of construction of wills,[54] provided by Stanley J. However, I have taken a different view to the majority and the Judge at first instance as to the proper construction of clause 4 as deployed in this will and, in particular, as to its interaction with clause 3(n). Given that I am in dissent I will keep my reasons relatively short.
[54] I prefer not to express a final view as to the applicability in South Australia of the approach adopted by the Supreme Court of the United Kingdom in Marley v Rawlings [2014] UKSC 2; [2015] AC 129 with reference to the relevance or otherwise of earlier will drafts.
The bequests in clause 3 considered in isolation fall within the following categories.
(i)Those which identify a named proposed recipient of a bequest but with no requirement to survive the testatrix and no gift over in default of survivorship – paragraphs (a), (c)[55] and (f).
(ii)Those which identify a named proposed recipient of a bequest but with a requirement to survive the testatrix and with a gift over in default of survivorship – paragraphs (b) and (d).
(iii)Those which identify a named proposed recipient of a bequest but with a requirement to survive the testatrix and no gift over in default of survivorship – paragraphs (e), (g), (m) and (n).
(iv)Those which establish charitable gifts – paragraphs (h) to (l).
[55] The bequest in paragraph (c) is subject to a condition that its recipient obtain the age of 25 years. This restriction can be ignored for present purposes.
The charitable bequests ((h) to (l)) can be ignored. The bequest in (m) is sui generis and can be ignored. There would be little, rational, justification for a gift over of funeral expenses in the event that the proposed recipient in (m) pre-deceased the testatrix.
On the basis of the analysis preferred by the majority, the bequests in (i) (paragraphs (a), (c) and (f)) are the only ones with respect to which clause 4 would operate.
As far as the bequests in (ii) are concerned (paragraphs (b) and (d)) there is no need for clause 4 to operate initially because of the express gift over. However, on the analysis favoured by the majority, there is no room for clause 4 to operate with respect to any intended gift over recipient who might fail to survive the testatrix.
As far as the bequests in (iii) are concerned (paragraphs (e), (g), (m) and (n)), on the analysis preferred by the majority, the bequest to a proposed recipient will fail if that recipient fails to survive the testatrix.
Consistently with the analysis preferred by the majority, a named proposed recipient of a bequest who pre-deceases the testatrix will not fall within the term “beneficiary” as used throughout the will. As earlier identified, clause 4 will only have a potential operation with respect to paragraph (a) the gift of $20,000 to Violet, paragraph (c) the gift of $250,000 to Corey and (f) the gift of $100,000 to Nicholas. This is a surprising result but without having a complete understanding of the nature of the testatrix’s relationship with the nominated persons including the large number of first cousins, being children of her deceased aunts and uncles, it is not possible to say for this reason alone that such a result presents a manifest absurdity.
Nevertheless, given the very advanced age of the testatrix at the time she made her will, it can be inferred that most, if not all, of her first cousins would also have been mature adults, at the least, and beyond child bearing age. That is, there would be a closed cohort of children of her first cousins living at the time the will was made. There is no evidence from which the nature of any relationship between the testatrix and all of those living children of her first cousins can be ascertained.
It can be assumed that a number of the testatrix’s first cousins’ children, living at the date the will was made, would benefit within a short space of time from the estate of any first cousin who inherited from, but died after, the testatrix. As such, it would be a matter of happenstance if the range of children of the testatrix’s first cousins ultimately to benefit were to depend on which first cousins survived the testatrix. This, to my mind, is a factor suggesting that this would not have been the testatrix’s intention.
In short, at the time the will was made the testatrix had before her a closed group of children of her first cousins. Given that some of those children, inevitably, would enjoy a benefit from the testatrix’s estate provided that their parent (a first cousin of the testatrix) survived the testatrix, to draw a will in terms that would restrict the benefit to that next generation on the basis of the survivorship of their parent suggests a construction that would result in an outcome not intended by the testatrix.
The analysis preferred by each of the majority judgments is premised on the basis that clause 3(n) is a class gift such that the class closes at the testatrix’s death and only those first cousins still alive at her death fall within the class. As a consequence, and according to Stanley J (at [55]).
[I]f a first cousin pre-deceased the testatrix they did not become a beneficiary for the purposes of clause 4.
Central to the reasoning of both majority judgments and of the Judge at first instance is the meaning to be given to the term “beneficiary” in clause 4 where it provides “If any beneficiary under my will does not survive me ...”. Clause 4 purports to focus on a circumstance where a beneficiary under the will does not survive the testatrix. In those circumstances, a gift over to a surviving child or children is directed. However, the burden of the reasoning of the majority and the Judge at first instance is that each of the identified proposed beneficiaries in clause 3(n) (and, similarly, those in clause 3(e) and in (g)) will not qualify as a “beneficiary” if (and because) they do not survive the testatrix.
If clause 3(n) were to be construed in isolation, I would, with respect, accept this reasoning. Clause 3(n), by its terms, requires any first cousin to survive the testatrix before being entitled to take a share of residue under clause 3(n). But this is not the same as requiring such survivorship as a condition of any such person being characterised as a “beneficiary” for the purposes of applying other clauses in the will, in particular, clause 4.
With respect, the approach of the majority is not consistent with the express language of clause 4, the opening words of which are:
If any beneficiary under my will does not survive me ...
These opening words contemplate that there will be persons to be described as “beneficiaries” under the will who will survive the testatrix and persons to be described as “beneficiaries” under the will who will not survive the testatrix. In other words, the fact that the class in clause 3(n) is restricted to first cousins who survive does not of itself preclude the application of clause 4 to expand the operation of clause 3(n).
Without staying to analyse or interpret each clause of the will in any detail, it is apparent, given the nature and the inconsistency of the language used throughout the will that its drafting lacked precision in many respects. Clause 4 is a relatively standard provision to be found in many wills. The general intention behind such a provision is to ensure that where a primary gift fails, the children of the recipient stand in the shoes of the proposed recipient. I take the view that clause 4 is intended to operate in that general way because it identifies as its primary subject any beneficiary who does not survive the testatrix. It is artificial, in my view, to characterise some of the proposed recipients in the various subclauses of clause 3 as beneficiaries and others as not being beneficiaries on the basis of whether or not an initially proposed recipient has survived the testatrix.
I would hold that clause 4 applies to extend the operation of clause 3(n) to encompass surviving children of the testatrix’s first cousins who had died before the date of the will and who had died between the date of the will and the date of the testatrix’s death.
For the reasons given at [66] to [69] and [73], there is no reason to think that the construction of clause 4 that I would adopt is one that would be contrary to the testatrix’s intentions. Indeed, in my view, it more properly reflects her intentions.
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