Forsyth v Perpetual Trustee Co (Ltd) - [1951] HCA 74

FORSYTH AND OTHERS

APPELLANTS; DEFENDANTS,

PERPETUAL TRUSTEE COMPANY (LIMI-

RESPONDENTS. TED) AND OTHERS

PLAINTIFF AND DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF Deed-Construction-Settlement-Protective trusts-Subject to prior disentitlement

absolute gift of trust fund to beneficiary on attaining age of fifty-five years-Gift over in event of beneficiary dying " without having received the absolute transfer SYDNEY,

and leaving no lawful issue -Death of beneficiary after attaining fifty-five years but before actually receiving gift-No prior dis. entitlement or lawful issue-Destination of trust fund-" Received " - Bene- ficially received de jure.

The trustee of a deed stood possessed of a trust fund upon trust for W. until he attained the age of fifty-five years, upon certain protective trusts, provision being made for the disentitlement of W. if certain things were done or happened prior thereto. If not disentitled, the trustee was directed, upon W. attaining that age, to transfer to W. the trust fund for his own separate use. If W. became disentitled or died before attaining that age, the trust fund was to be held in trust for W.'s surviving lawful issue, but "should he die without having received the absolute transfer of the trust

and leaving no lawful issue' then the trustee was to hold the trust fund upon other trusts. W. attained the age of fifty-five years and remained entitled to the trust fund, but three months later he died without issue, and, owing to a long illness, before the trust fund had been transferred

Held that the word " receive" was used by the settlor in the sense of receive de jure ", therefore the trust fund was held by the trustee of the deed in trust for the executors of the will of W.

Decision of the Supreme Court of New South Wales (Roper C.J. in Eq.)

84 CLR 155

APPEAL from the Supreme Court of New South Wales.

Perpetual Trustee Co. (Ltd.) was the trustee of an indenture of trust made on 4th October 1934, between Edgar William Forsyth, since deceased, and that company whereby certain investments consisting of 5,000 shares in Britannia Investment Co. Ltd. were settled upon trust for William Edgar Forsyth, a son of the settlor, and in certain events to such of his brother Walter Wright Forsyth and sisters Mavis Forsyth and Lorna Madge Forsyth as should survive him.

Clause 1 of the indenture provided that the income arising from the shares should be paid to William Edgar Forsyth until he should attain the age of fifty-five years or die, or until he should become bankrupt or alienate or charge or attempt to alienate or charge the income or part thereof, or the happening of any event disentitling him personally to receive and enjoy such income or some part thereof, and after the failure or determination of this trust in the lifetime of William Edgar Forsyth by reason of any such bankruptcy alienation or charge or attempted alienation or charge or other event the trustee should, during the remainder…

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.

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Details

Case: [1951] HCA 74
Decision Date: 13 December 1951

CaseChat Overview and Summary

The appeal concerned the construction of a trust deed where Perpetual Trustee Co. (Ltd.) was the trustee. The primary beneficiary, William Edgar Forsyth, was entitled to the trust fund upon attaining the age of fifty-five years, with provisions for disentitlement and a gift over in certain circumstances. William attained the age of fifty-five but died three months later, before the trust fund had been formally transferred to him. His executors claimed the fund, while his siblings, who were beneficiaries under the gift over provisions, also asserted a claim.

The central legal issue before the High Court was the interpretation of the phrase "without having received the absolute transfer" within clause 5 of the trust deed. Specifically, the court had to determine whether "received" referred to the actual physical receipt of the trust fund by the beneficiary, or whether it meant becoming legally entitled to receive the fund (de jure receipt). This distinction was critical in deciding whether the gift over to the siblings took effect upon William's death.

The High Court, affirming the decision of the Supreme Court of New South Wales, held that the word "received" in clause 5 was intended by the settlor to mean "received de jure," or legally entitled to receive. The court reasoned that this interpretation aligned with established legal principles favouring early vesting and preventing beneficiaries from being deprived of their entitlements due to delays by trustees in completing transfers. The judges noted that a literal interpretation of "actual receipt" could lead to uncertainty and potential invalidity of the clause, particularly if only part of the fund had been transferred. Therefore, William's entitlement to the fund became absolute upon attaining the age of fifty-five, and this entitlement was not divested by his subsequent death before the physical transfer of the assets.

Consequently, the High Court dismissed the appeal. The trust fund was held to be absolutely vested in William Edgar Forsyth upon his attaining the age of fifty-five years, and thus passed to his executors. The gift over provisions in favour of his siblings were not triggered by his death.

Orders