Gregory Joseph Whimp (Plaintiff) Charlise Isabella Roberts Scaglia by her tutor Elissa Clare Roberts (First defendant) Ava Isabella Roberts Scaglia by her tutor Elissa Clare Roberts (Second defendant) Jett Timothy...

Case •

[2024] NSWSC 432

•

23 April 2024

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Whimp v Scaglia [2024] NSWSC 432
Hearing dates: 22 March 2024
Date of orders: 23 April 2024
Decision date: 23 April 2024
Jurisdiction:Equity - Succession & Probate List - Probate
Before: Richmond J
Decision:

See [64] and [66]

Catchwords:

SUCCESSION — construction — gifts to class

SUCCESSION — construction — legacies and devises

SUCCESSION — construction — general principles — meaning of phrase ‘survive me’

Legislation Cited:

Succession Act 2006 (NSW)

Income Tax Assessment Act 1936 (Cth)

Cases Cited:

ANZ Executors and Trustee Company Ltd v Hicks [2000] VSC 288

Brennan v Permanent Trustee Co of New South Wales (1945) 73 CLR 404; [1945] HCA 17

De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351

Estate of Kallidis; Kallidis v Kallidis [2012] NSWSC 1485

Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234

Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111

Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481; [2010] HCA 10

Fell v Fell [1922] HCA 55; (1922) 31 CLR 268

Gilmour v Macphillamy [1930] AC 712

Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264; [1991] HCA 51

Hayes v National Heart Foundation of Australia [1976] 1 NSWLR 29

Hayes v National Heart Foundation of Australia [1976] 1 NSWLR 29

Hutchinson v National Refuges for Homeless and Destitute Children [1920] AC 794

Knight v Knight (1912) 14 CLR 86; [1912] HCA 36

McGrath v Hughes (unreported) NSW Supreme Court, Bryson J, 24 July 1991

Napper v Miller [2003] NSWSC 376

Parry v Haisma [2012] NSWSC 290

Perrin v Morgan [1943] AC 399

Re Butler [1980] Qd R 601

Re Cuming; Nicholls v Public Trustee (1945) 72 CLR 86; [1945] HCA 32

Re Harrison (1885) 30 Ch D 390

Re James’ Will Trust [1962] Ch 226

Re Johnson [1939] 2 All ER 458

Re Lapalme; Daley v Leeton (2019) 60 VR 71; [2019] VSC 534

Trustee for the Estate of the late AW Furse No 5 Will Trust v Federal Commissioner of Taxation (1990) 21 ATR 1123

Texts Cited:

GE Dal Point, Law of Succession (3rd Ed, Lexis Nexis, 2021)

P Herzfeld and T Prince, Interpretation (2nd Ed, Thomson Reuters, 2020)

Category:Principal judgment
Parties: Gregory Joseph Whimp (Plaintiff)
Charlise Isabella Roberts Scaglia by her tutor Elissa Clare Roberts (First defendant)
Ava Isabella Roberts Scaglia by her tutor Elissa Clare Roberts (Second defendant)
Jett Timothy Roberts by his tutor Grant Timothy Roberts (Third defendant)
Kenzie Jane Roberts by her tutor Grant Timothy Roberts (Fourth defendant)
Darcy Xavier Bennett by his tutor Greta Patrice Roberts (Fifth defendant)
Evie Clare Bennett by her tutor Greta Patrice Roberts (Sixth defendant)
Aiden Paul Roberts by his tutor Drew Cameron Roberts (Seventh defendant)
The Garvan Institute of Medical Research (ABN 62 330 391 937) (Eighth defendant)
Representation:

Counsel:
A G Rogers (Plaintiff)
J D Cook (First to seventh defendants)
L Gidley (solicitor) (amicus curiae for the interests of unborn children)

Solicitors:
Perpetual Law Group (Plaintiff)
Anderson Boemi Lawyers (First to seventh defendants)
Glass Goodwin (Amicus curiae for the interests of unborn children)
File Number(s): 2023/116108
Publication restriction: Nil

JUDGMENT

  1. These proceedings concern the proper interpretation of the last will of Katrina Gaye Roberts (the deceased) dated 25 July 2018 (the Will) who died, tragically, on 11 April 2022 at the age of 48 due to a car accident.

  2. The Will appointed the deceased’s uncle, Mr Gregory Whimp and her sister, Ms Elissa Roberts, as joint executors. Mr Whimp is the present plaintiff, and the person to whom probate was granted on 15 May 2023, Ms Roberts having renounced probate prior to the grant. The estate was estimated to be valued $1,485,841.61 at the time of the grant of probate.

  3. By cl 4 of the Will half of the deceased’s estate is to pass to the Garvan Institute of Medical Research (the Institute). There is no issue between the parties that this is a valid gift, and the Institute has filed a submitting appearance in the proceedings. Each of the first to seventh defendants is below the age of majority and have tutors appointed (who are their respective parents).

  4. The relevant family tree is included below:

  1. As can be seen, the deceased had four siblings, Ms Elissa Roberts (Elissa), Mr Grant Roberts (Grant), Ms Greta Roberts (Greta) and Mr Drew Roberts (Drew), all of whom survived her. In order to avoid confusion, and without intending any disrespect, I will use the first names of the deceased’s family members throughout this judgment.

  2. The first and second defendants are the children of Elissa, the third and fourth defendants are the children of Grant, the fifth and sixth defendants are the children of Greta, and the seventh defendant is the child of Drew. Each are beneficiaries under cl 3 of the Will. As shown in the family tree, on 4 December 2023 after the deceased’s death, Drew and his wife had another child, Elijah.

  3. As the proceedings concern interests of potential beneficiaries that are as yet unborn, and with the consent of the parties, the Court appointed Ms Laura Gidley as amicus curiae pursuant to the Court’s inherent jurisdiction to represent those interests at the hearing of this matter.

  4. After the hearing the Court gave the parties the opportunity to address the potential relevance of cl 7.4(ii) of the Will to the first construction issue referred to at [29] below which had not been addressed at the hearing, and each subsequently provided further written submissions on that question on 3 April 2024.

Relief sought and issues for determination

  1. By amended summons filed 5 October 2023, the plaintiff seeks a declaration as to whether, on its proper construction, the Will:

(i) provides by clause 3.4 that there are to be three trusts in favour of the children of Greta Patrice Roberts, Elissa Clare Roberts and Grant Timothy Roberts respectively; and

(ii) provides by clause 3.5 that moneys gifted to beneficiaries under clauses 3.3 and 3.4 of the said will are to be used for no other purpose than to assist in:

(a) purchasing property for; and

(b) in the education of; the said beneficiaries and for no other purpose;

(iii) makes provision for any child of any of:

(a) Drew Cameron Roberts; or of

(b) Greta Patrice Roberts; or of

(c) Elissa Clare Roberts; or of

(d) Grant Timothy Roberts; born after the death of the Deceased;

(iv) if the answer to any or all of paragraph 1 (iii) (a), (b), (c) and (d) above is in the affirmative, whether the Will makes provision for any adopted, fostered or step-child of:

(a) Drew Cameron Roberts; or of

(b) Greta Patrice Roberts; or of

(c) Elissa Clare Roberts; or of

(d) Grant Timothy Roberts; born after the death of the Deceased;

(v) whether each sub-part of the Deceased’s estate referred to in clauses 3.2 and 3.4 of the Will is a fund of equal value to each other sub-part;

(vi) whether the Will provides for each beneficiary referred to in paragraphs 3.2, 3.3 and 3.4 of the Will to receive an equal share in the Deceased’s estate;

(vii) if the answer to paragraph 1 (vi) above is in the negative, whether the Will provides any mechanism for determining the entitlement of each beneficiary referred to in paragraph 3.2, 3.3 and 3.4 of the Will;

(viii) in the event that the answer to paragraph 1 (vii) above is in the negative, whether the Plaintiff has an unfettered discretion with respect to benefits to be conferred upon each beneficiary referred to in paragraph 3.2, 3.3 and 3.4 of the Will.

  1. The parties have agreed on eight questions to be answered in the Joint Statement of Agreed Facts and Issues for Determination filed on 23 November 2023 (Joint Statement). Those questions, and the answers to them, are set out at the end of this Judgment.

Terms of the Will

  1. The provisions of the Will setting out the gifts made are as follows:

GIFTS

3.   I give all of my property, after payment of my estate liabilities to my Trustee on trust to divide it into enough parts to pay those of the following gifts which take effect. All parts are of equal value. (No parts are to be set aside for any gifts which do not take effect).

3.1.   I give 1 part to my Trustee on trust to divide it into enough sub-parts to pay those of the following gifts which take effect. All sub-parts are of equal value. (No sub-parts are to be set aside for any gifts which do not take effect).

3.2   I give 1 sub-part to my brother [Drew] if he survives me and he does not have children at the time of my death. (This does not include any adopted, fostered or step-children).

3.3.   If after the making of this Will my brother [Drew] has children, then the gift in the previous clause is to be shared between those of his children who survive me and reach 25 years of age. (This does not include any adopted, fostered or step-children).

3.4.   I give 3 sub-parts to be shared between all my NIECES AND NEPHEWS who are the children of my sisters [Greta] and [Elissa] and my brother [Grant] if they survive me and reach 25 years of age. (This does not include any adopted, fostered or step-children).

3.5.   It is my wish that the funds be used to assist in purchasing a property and assist in their education but does not include any HECS or equivalent educational debt.

4.   I give 1 part to [the Institute] if it still exists when my Trustee is ready to distribute this gift.

4.1.   I request that if possible, this gift be used for Scientific Research.

4.2.   I direct my Trustee to give this gift to the person authorised to receive gifts on behalf of the organisation. The responsibility to see that this gift is properly applied will then belong to the organisation and not to my Trustee.

4.3.   If, when my Trustee is ready to distribute this gift, [the Institute] has changed its name, has merged with another organisation or has ceased to exist, I direct my Trustee to use its discretion, to distribute this gift to a charitable organisation whose objects and purposes most closely resemble the objects and purposes of [the Institute].

  1. Under the heading “My Trustee’s Powers”, cl 6 provides that the singular includes the plural and vice versa and cl 7 contains a number of paragraphs setting out extensive powers conferred on the trustee, such as to make loans to beneficiaries on any terms, acquire or lease property for the benefit of a beneficiary and so on. Relevantly for present purposes it includes the following power in cl 7.4 in relation to the corpus or income of the estate (emphasis added):

7.   My Trustee may in my Trustee’s discretion:

…

7.4   apply the whole or any part of the capital or income of any part of my estate to which a beneficiary is entitled or may become entitled for that beneficiary’s maintenance, education, benefit or advancement and in respect of this power:

(i)   may spend money directly for these purposes or pay it to any person my Trustee thinks fit or pay it to the beneficiary to spend. If my Trustee pays it to any person or to the beneficiary, my Trustee must specify the purposes for which it must be used but will not be responsible if any person or the beneficiary does not follow my Trustee’s direction;

(ii)   I give the income from that part of my estate to which a beneficiary may become entitled to that beneficiary. This means the income will vest in the beneficiary at my death and the beneficiary will be entitled to call for the income upon reaching 18 years of age and being capable of giving a good discharge …

Principles

  1. The starting point for the construction of a will is the following statement of Viscount Simon LC in Perrin v Morgan [1943] AC 399 at 406:

…the 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.

  1. In the same case, Lord Romer said at 420:

… 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. To understand the language employed the court is entitled, to use a familiar expression, to sit in the testator’s armchair. When seated there, however, 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 has plainly said …

  1. This fundamental principle was recently stated by White JA (with whom Gleeson JA agreed) in De Lorenzo v De Lorenzo (2020) 104 NSWLR 155; [2020] NSWCA 351 at [50]:

The object of construction of a will is to give effect to what can be ascertained, having regard to admissible extrinsic evidence, the testatrix intended by the words she used: Fell v Fell (1922) 31 CLR 268 at 273–274; [1922] HCA 55; Perrin v Morgan [1943] AC 399 at 406, 416. The intention of the testatrix is to be determined from the language of the will read in the light of the circumstances in which it was made. The Court is entitled to sit in the “testatrix’s armchair” to understand the language she employed: Hatzantonis v Lawrence [2003] NSWSC 914, [7] ff (Bryson J).

  1. The “armchair principle” referred to in the above passages was summarised by White J (as his Honour then was) in an earlier decision, Parry v Haisma [2012] NSWSC 290 at [10] (emphasis in original):

There was no real controversy about the admissibility of extrinsic evidence for the purpose of construing the will. In Higgins v Dawson [1902] AC 1 the House of Lords said that evidence of surrounding circumstances could only be adduced where there was ambiguity (at 7, 8 and 11) and endorsed a very narrow approach to finding ambiguity (at 10). That approach is not consistent with the current approach to construction of wills (Perrin v Morgan [1943] AC 399) and was not urged in the present case. Evidence of the circumstances surrounding the testatrix was admissible to assist in the construction of the will so that the court could place itself “so to speak, in [the testatrix’s] arm-chair and consider the circumstances by which [she] was surrounded when [she] made [her] will to assist … in arriving at [her] intention” (Boyes v Cook (1880) 14 Ch D 53 at 56; Allgood v Blake (1872–73) LR 8 Exch 160 at 162). As it was put in Allgood v Blake (at 162):

“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.”

  1. As part of the process of construction it is necessary to consider the terms of the will as a whole and seek to ascertain the basic scheme which the deceased had conceived for dealing with his or her estate and then to construe the will, if possible, to give effect to that scheme: Fairbairn v Varvaressos (2010) 78 NSWLR 577; [2010] NSWCA 234 at [19].

  2. Isaacs J in Fell v Fell [1922] HCA 55; (1922) 31 CLR 268 at 273–275 identified a number of principles of construction, including relevantly the following (citations omitted):

(1)    “Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence, as is necessary in order to enable us to understand the words which the testator has used”

(2)    “The instrument … must receive a construction according to the plain meaning of the words and sentences therein contained. But … you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it” … 

(3)    “If the will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the Court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has, on the whole will, sufficiently declared”…

(4)    An inference cannot be made “that did not necessarily result from all the will taken together” … A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed …

(5)    “[The Court] cannot give effect to any intention which is not expressed or plainly implied in the language of” the “will” “You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication” … 

  1. Consistently with the second proposition stated by Isaacs J in Fell v Fell above, a word or phrase used in a will is given its ordinary and natural meaning, unless the context provided by the will as a whole or admissible extrinsic evidence indicates that the testatrix used it in a different sense or the ordinary meaning makes no sense in light of the surrounding circumstances whereas a secondary meaning does make sense: GE Dal Point, Law of Succession (3rd Ed, Lexis Nexis, 2021) at [8.6]; P Herzfeld and T Prince, Interpretation (2nd Ed, Thomson Reuters, 2020) at [31.40(6)]. Where the ordinary meaning applies on this approach, it will be adopted even though the result of giving the word its ordinary meaning may appear harsh.

  2. Thus, in Re James’ Wills Trusts [1962] Ch 226 which concerned the meaning to be given to the word “surviving” in a will, Buckley J said at 234–235 (citations omitted):

… a testator is entitled to be capricious or eccentric in his testamentary dispositions if he chooses (see per Knight-Bruce L.J. in Hart v Tulk) and the fact that the terms of his will, when interpreted according to their ordinary and apparent meaning, may produce odd results is not alone a ground for construing his language in some other sense which it is less apt to bear: nor is the fact that he may have failed to think out how the scheme of his will might operate in all possible or probable circumstances, for to infer from the fact that the language may not appropriately fit all the possible or probable circumstances that the testator used such language in some sense other than its natural meaning assumes that the testator did the very thing which it seems he failed to do, namely, consider the appropriateness of his will to all possible or probable contingencies. One likely explanation may be that he meant his words to bear their normal meaning and failed to appreciate the consequences.

And later at 245:

3. The language used must be construed in its natural sense unless the context shows that this would defeat the testator’s intention: Gilmour v MacPhillamy.

4. The mere fact that, so construed, the will might in certain possible, or even probable, circumstances produce results that seem fanciful or even harsh is not a sufficient ground for adopting another interpretation; for, although this fact may raise doubts whether this construction fulfils the testator’s intention, doubts are not enough: you must be able to discover from the language used what the intention was, that is to say, that the testator intended to use the word “survive” in some secondary sense: Wake v Varah; Auger v Beaudry; Gilmour v MacPhillamy.

  1. In Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111, Stanley J (with whom Kourakis CJ agreed) made a similar point when he said at [32] (citations omitted):

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, not what she meant to say, but what she actually said.

  1. Section 32 of the Succession Act 2006 (NSW) permits the admission of extrinsic evidence to assist in the construction of a will in certain circumstances. This provides:

(1)   In proceedings to construe a will, evidence (including evidence of the testator’s intention) is admissible to assist in the interpretation of the language used in the will if the language makes the will or any part of the will -

(a)   meaningless, or

(b)   ambiguous on the face of the will, or

(c)   ambiguous in the light of the surrounding circumstances.

(2)   Despite subsection (1), evidence of the testator’s intention is not admissible to establish any of the circumstances mentioned in subsection (1)(c).

(3)   Despite subsection (2), nothing in this section prevents evidence that is otherwise admissible at law from being admissible in proceedings to construe a will.

  1. It was not suggested by any party that s 32 was relevant to the issues which arise in the present case. That approach appears correct on the basis that it cannot be said that any part of the Will is meaningless or ambiguous, and further there was no evidence before the Court which indicated that the deceased’s intention was other than as expressed in the language of the Will.

Scheme of the Will

  1. The scheme of the Will is that the deceased’s estate is to be separated into two equal parts and:

  1. one part is given to the Institute: cl 4;

  2. the other part is to be divided into four sub-parts, to be held on trust as follows:

  1. one sub-part is given to Drew if he survives the deceased and does not have children at the time of the deceased’s death or, if after the making of the will he has children, then that sub-part is “to be shared between those of his children who survive me and reach 25 years of age”: cll 3.2 and 3.3;

  2. three sub-parts “to be shared between all my nieces and nephews who are the children of [Greta, Elissa and Grant] if they survive me and reach 25 years of age”: cl 3.4;

  1. It is apparent from [24(b)] that the intended beneficiaries of one half of the deceased’s estate were the deceased’s nieces and nephews subject to the contingency that they survive the deceased and reach 25 years of age, except that in the case of Drew, he would take the 1/8th share otherwise attributed to his children if he had no children at the time of the deceased’s death.

  2. Each sub-part is of equal value and no sub-part is to be set aside for any gifts which do not take effect: cl 3.1.

  3. Clause 3.5 contains a “wish” that the funds which are the subject of the gifts in cll 3.3 and 3.4 be used to assist in purchasing a property and assist in the education of the children who are beneficiaries named in those clauses, except any HECS or equivalent educational debt.

  4. While cl 7 confers on the trustee extensive powers, it also includes in cl 7.4(ii) a direction that income from any part of the deceased’s estate to which a beneficiary may become entitled is given to that beneficiary and further provides that “this means the income will vest in the beneficiary at my death”, with the beneficiary being entitled to call for the income upon reaching 18 years of age and being capable of giving a good discharge.

  5. The principal issues of construction that arise are:

  1. who are the beneficiaries under cll 3.3 and 3.4, which turns on the meaning to be given to the expression “survive me” in cll 3.3 and 3.4;

  2. whether cl 3.4 provides for the creation of one trust of three sub-parts or alternatively three separate trusts of one sub-part each with one sub-part allocated to Greta’s children, one to Elissa’s children and one to Grant’s children;

  3. whether cl 3.5 is a mere wish.

First issue: meaning of “survive me”

  1. At the time the deceased made her Will, each of her siblings had children except for Drew. Drew had one child after the Will was made, who was still alive at the deceased’s death (Aiden). Elissa had one child after the Will was made, who was still alive at the deceased’s death (Ava). Drew had a further child after the deceased’s death (Elijah) and it is possible that each of the deceased’s siblings will have further children. Whether Elijah and any other children of the deceased’s siblings who are born after her death will benefit under cll 3.3 or 3.4 turns on the meaning to be given to the expression “survive me” in cll 3.3 and 3.4.

  2. In order for any child of the deceased’s siblings to qualify as a beneficiary under either cl 3.3 or cl 3.4, that child must survive the deceased and reach 25 years.

  3. The authorities on the meaning of the expression “survive me” in the context of a will were reviewed by Mandie J in ANZ Executors and Trustee Company Ltd v Hicks [2000] VSC 288; Young CJ in Eq in Napper v Miller [2003] NSWSC 376 and McMillan J in Re Lapalme; Daley v Leeton (2019) 60 VR 71; [2019] VSC 534. It is clear from these authorities that:

  1. The natural and primary meaning of “survive me” in the context of a will is “outlive” and it requires that the person was alive both before and after the death of the testator: Knight v Knight [1912] HCA 36; (1912) 14 CLR 86 at 98; Brennan v Permanent Trustee Co of New South Wales [1945] HCA 17; (1945) 73 CLR 404 at 409;

  2. This natural and primary meaning will be displaced where it can be established that when the will as a whole is considered in light of the surrounding circumstances to which the Court may have regard under the armchair principle, a broader meaning, such as “live after me” was intended: see eg. Brennan v Permanent Trustee and McGrath v Hughes (unreported NSW Supreme Court, Bryson J, 24 July 1991);

  3. A beneficiary who contends for the broad meaning will have the burden of proof that the testator intended to depart from the natural and primary meaning: Hutchinson v National Refuges for Homeless and Destitute Children [1920] AC 794 at 802;

  4. It is not enough that the exclusion of potential beneficiaries born after the testator’s death is seen as harsh or doubtful, rather it is necessary to discover from the language of the will in the circumstances in which it was made that the testator’s intention was to use the word “survive” in some secondary sense: Gilmour v Macphillamy [1930] AC 712; Re James’ Will Trusts [1962] Ch 226 at 245.

  1. In relation to the first two propositions, in Knight v Knight, the majority of the High Court (Barton and Isaacs JJ, Griffiths CJ dissenting) held that the primary meaning of “survive” was to “outlive” the person referred to and the context of the will in that case, read as a whole, did not indicate that another meaning was intended. In contrast, in Brennan v Permanent Trustee the majority of the High Court (Rich, Dixon and Williams JJ, Starke J dissenting) held that the word “survive” in the will at issue in that case was used in the less restrictive sense of “live after me” which was strongly influenced by the language of the will (in particular, the gift to Charlotte Maud Gilbert which contemplated the possibility of her issue taking under the trusts created by the will notwithstanding that they were born after the testator’s death: see Rich J at 411, Dixon J at 416 and Williams J at 419). Ultimately, the decision in each case depended on the terms of the will and also the surrounding circumstances in which it was made.

Submissions

  1. The plaintiff submitted that the primary and natural meaning of “survive” should be adopted. Reliance was placed on three elements of the Will. First, cl 3.2 which refers to Drew having entitlement if he “survives me … and does not have children at the time of my death”, which indicates a focus on whether Drew had children at the deceased’s death in order for the gift in cl 3.3 to operate, which in turn specifies that the gift is to be shared between those of Drew’s children “who survive me and reach 25 years of age”, which again is suggestive that the primary and natural meaning was intended. Second, cl 3.4 which is expressed to be a gift to all my nieces or nephews who are the children of her siblings, points to persons who were alive at the time of the deceased’s death. Third, the direction in cl 7.4(ii) points to the conclusion that only persons who were alive at the time of death of the deceased were intended to benefit from the gifts in cll 3.3 and 3.4.

  2. The defendants, and Ms Gidley as amicus, submitted that the broader meaning of “live after me” should be adopted and, taken together, the reasons advanced were essentially as follows. First, cll 3.3 and 3.4 of the Will indicate an intention to treat her nieces and nephews equally and treating those born after the deceased’s death as included in the class of beneficiaries who will share the gift if they reach the age of 25 would be consistent with that scheme. Further, given that a niece or nephew is required to attain the age of 25 to take, to construe the word “survive” narrowly to exclude those born after the deceased’s death would create a capricious outcome. This is because by the time the nieces and nephews living at the deceased’s death become entitled to their gift, some additional nieces and nephews would be excluded, which is inconsistent with the deceased’s intention that the nieces and nephews share equally.

  3. Second, in the case of the gift for Drew’s children in cl 3.3, this commences with the words “If after the making of this Will my brother Drew has children” but does not expressly state “but before my death” thereby suggesting that the gift in that clause is not limited to children living at the time of the deceased’s death.

  4. Third, cl 3.4 does not name the deceased’s living nieces and nephews, but rather uses general words to identify them, suggesting that it was not intended to limit the gift to those who may be alive at the time of the deceased’s death.

  5. Fourth, the context in which the Will was made is similar to the context of the will at issue in Brennan v Permanent Trustee and raises a strong presumption that the deceased did not use the word “survive” in its natural and primary sense.

  6. Fifth, the direction in cl 7.4(ii) does not assist with the construction of the expression “survive me” for several reasons. First, the direction only arises in respect of the whole or part of the estate which has been applied by the trustee for a prospective beneficiary. Second, it refers to a beneficiary having the ability to call for the income on turning 18, which is inconsistent with the age requirement of 25 years in cl 3.3 and cl 3.4. Third, the Will expressly provides that no sub-parts are to be set aside for any gifts which do not take effect and cl 7.4(ii) is inconsistent with this requirement. Fourth, the vesting of income in a beneficiary under cl 7.4(ii) on the death of the deceased would have the effect of bypassing the requirement of cl 3.3 and cl 3.4 that the beneficiary must attain the age of 25 years to benefit.

Consideration

  1. Under the armchair principle, the Court can take into account the following matters as part of the context in which the Will was made: (a) the deceased was born on 17 February 1974 and so was 44 at the time she made the Will; (b) she was an accountant, single and had no children of her own, and (c) the deceased had four siblings, Drew (aged 42 at the time of the making of the Will), Greta (aged 40), Grant (aged 36) and Elissa (aged 34), each of whom had children except for Drew and each of whom was capable of having further children after she made her Will.

  2. In my view, each of the matters referred to in the previous paragraph is consistent with “survive” in the Will being used with its ordinary meaning of “outlive” rather than the less restrictive meaning of “live after”. In particular, on the evidence there is no basis for any inference other than that the deceased expected to live for many years after she made her Will. In that eventuality, by the time of her death it was likely that the class of potential nieces and nephews would be ascertained and hence the ordinary meaning would be likely to cover, in practical terms, all her nieces and nephews whenever born.

  3. When regard is had to the language of the Will as a whole, there are three provisions which are particularly relevant. First, cl 3.2 uses “survive” with its ordinary meaning in reference to Drew, and then indicates, with the words “and he does not have children at the time of my death”, that the deceased’s focus in relation to the gift to Drew’s children under cl 3.3 is on whether he has children at the time of his death rather than at any time after her death. This suggests that “survive” is used in its ordinary sense.

  4. Second, in cl 3.4 the gift is stated to be in favour of “all my nieces and nephews who are the children of [Greta, Elissa and Grant] if they survive me and reach 25 years of age …” The use of the present tense “are” in identifying the children who are to take suggests that the ordinary meaning of “survive” was intended in cl 3.4. There is nothing in the context to suggest a different meaning of “survive” is intended in cl 3.4 than in cl 3.2 and cl 3.3.

  5. Third, a significant matter in construing the expression “survive me” in cll 3.3 and 3.4 is cl 7.4(ii). The drafting of cl 7.4(ii) is unusual in that it is expressed as a gift of income (in respect of the part of the estate to which the beneficiary may become entitled) but appears in a subclause of a provision conferring a power to apply capital or income to a beneficiary for that beneficiary’s maintenance, education, benefit or advancement. Further, it is described as an aspect of that power, as is apparent from the chapeau which states that cl 7.4(ii) operates “in respect of this power”.

  6. However, despite the infelicitous drafting, it is clear that cl 7.4(ii) is intended to operate as an immediate gift of the income from that part of the corpus of the estate to which a beneficiary “may become entitled” to that beneficiary. The words “may become entitled” recognise that at the time the gifts under cll 3.3 and 3.4 of the Will take effect (being the deceased’s death), the entitlement of one or more of the beneficiaries named in cll 3.3 and 3.4 to the corpus may be subject to a contingency (being that they attain the age of 25). Importantly, cl 7.4(ii) states that such beneficiaries will have a vested interest in the income at the time of the deceased’s death notwithstanding that their entitlement to the corpus is contingent. This indicates an intention that the beneficiaries who have a contingent entitlement to the corpus (ie “may become entitled”) will be alive at the deceased’s death which will only be true if “survive” has its ordinary meaning. If “survive” was intended to mean “live after”, one would expect cl 7.4(ii) to have said something like “will vest in the beneficiary at my death or their birth, whichever is later”.

  7. That construction gives effect to the clear words of cl 7.4 (ii). Further, it may be inferred that this was the intention of cl 7.4(ii) for two reasons. First, the making of an immediate gift of the income of the trust estate to beneficiaries who are minors (which is the evident purpose of cl 7.4(ii)) protects the beneficiaries from an adverse tax consequence. Second, a gift of intermediate income is not uncommon in the case of contingent gifts under both testamentary and inter vivos trusts. I will now explain each of these considerations.

  8. As to why cl 7.4(ii) is directed to preventing an adverse tax consequence, it was clear when the Will was drafted that it was possible, depending on when the deceased died, that there would be one or more trusts for beneficiaries who would be under the age of 18 (ie. minors) and that this would raise a significant taxation issue. This can be illustrated by considering the situation which actually arose which is that on the deceased’s death, a trust arises under the Will for her nieces and nephews who are all minors. The taxation of the net taxable income of a trust under Division 6 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) turns to a significant extent on whether there are beneficiaries who are presently entitled to the trust accounting income for the year of income. Where the trust has accounting income and a net taxable income and there is no beneficiary who is presently entitled to any share of the trust accounting income, then the trustee is assessed and is liable to tax under s 99 of the ITAA 1936 on the net taxable income of the trust as if it was the income of a resident individual and without any deduction. The applicable rates at the time the Will was made (as is still the case) were a sliding scale up to a top marginal rate of 45% with no tax-free threshold. For example, if the trust had a net taxable income of $50,000, the trustee would be assessed for tax of $11,255.

  9. Where, on the other hand, one or more of the beneficiaries are presently entitled to all the trust accounting income, and all of those beneficiaries are minors who are residents of Australia for tax purposes, the trustee will be assessed and liable to tax under ITAA 1936 s 98 on each beneficiary’s share of the net taxable income of the trust at the graduated rates applicable to an individual, including the tax-free threshold. Consequently, taking the previous example where the net taxable income of the trust is $50,000 and there are say four beneficiaries who are minors who are each presently entitled to an equal share of the trust accounting income, the trustee would be assessed on $12,500 in respect of each beneficiary. There would be no tax payable by the trustee under s 98 as the amount of $12,500 is under the tax-free threshold.

  10. There is an exception to the position stated in the previous paragraph where the trust income is income to which Division 6AA of the ITAA 1936 applies. Division 6AA imposes on a trustee a penal rate of tax of 45% on income to which it applies. However, Division 6AA does not apply to assessable income of a trust estate that resulted from a will: ITAA 1936 s 102AG(2)(a). All that is necessary to satisfy s 102AG(2)(a) is that the assessable income of the trust be assessable income of a trust estate, that trust estate being one which resulted from a will: Trustee for the Estate of the late AW Furse No 5 Will Trust v Federal Commissioner of Taxation (1990) 21 ATR 1123 at 1136 per Hill J. Accordingly, income arising under a testamentary trust or trusts of the kind contemplated by the Will is not subject to Division 6AA.

  11. It follows that it was essential if the adverse tax result referred to at [47] above was to be avoided, that the beneficiaries who were minors be made presently entitled to all the income of each trust arising under the Will. Present entitlement for the purposes of Division 6 is a trust law concept and requires, in order for a beneficiary to be presently entitled to a share of the income of a trust estate, that (a) the beneficiary has an interest in the income which is both vested in interest and vested in possession, and (b) the beneficiary has a present legal right to demand and receive payment of the income, whether or not the precise entitlement can be ascertained before the end of the relevant year of income and whether or not the trustee has the funds available for immediate payment: Harmer v Federal Commissioner of Taxation [1991] HCA 51; (1991) 173 CLR 264 at 271; Federal Commissioner of Taxation v Bamford (2010) 240 CLR 481; [2010] HCA 10 at [37].

  1. Where a beneficiary has a vested and indefeasible interest in the trust accounting income but is not presently entitled to it (eg. because he or she is a minor), the beneficiary is deemed to be presently entitled to that income by virtue of s 95A(2) of the ITAA 1936. This deeming is necessary to deal with the situation where, as in the case of minors, the beneficiary does not have a present right to call for payment of trust income so that para (b) of the test stated in Harmer is not satisfied.

  2. The evident purpose of cl 7.4(ii) is to ensure that each beneficiary under the Will who is a minor will have a vested and indefeasible interest in the trust accounting income despite the fact that he or she is unable (as a minor) to demand payment of that income.

  3. There is another consequence of cl 7.4(ii) which is the second consideration referred to at [46] above. The gifts in cll 3.3 and 3.4 are contingent on two things, the beneficiary surviving the testator and reaching the age of 25. If the condition as to age in a gift of this kind is a condition precedent, then the beneficiaries will not take any interest under the will until the condition is satisfied. If, instead, it is a condition subsequent, the gift vests in interest in the beneficiary but is subject to divestment if the condition is not satisfied; the gift is said to be vested in interest and vesting in possession is deferred until the condition is met. Determination of which alternative applies turns on the construction of the will: Re Cuming; Nicholls v Public Trustee [1945] HCA 32; (1945) 72 CLR 86 at 91. Reflecting the preference for early vesting of gifts, where a will provides for a gift of the income to vest in the beneficiary during the period of the contingency, the second alternative applies: Re Butler [1980] Qd R 601 at 603–604. The same result would not follow from a mere power to advance income to a beneficiary to whom a contingent gift has been made, as such a power is not treated as an indication of early vesting: Butler at 604.

  4. The effect of cl 7.4(ii), therefore, is to provide certainty as to the time when the gifts will vest in interest, bearing in mind cl 3.1 which states that “no sub-parts are to be set aside for any gifts which do not take effect”. A gift will take effect when it vests in interest. Giving “survive” its ordinary meaning, consistently with cl 7.4(ii), means that at the date of the deceased’s death it would be known whether any of the gifts of the sub-parts would not take effect, so that the destination of the one half of the estate governed by cl 3 would be determined at that time. As things turned out, the gifts of each sub-part did take effect with all the nieces and nephews living at the deceased’s death taking gifts vested in interest in respect of the four sub-parts of the estate governed by cl 3.

  5. For these reasons, in my view the ordinary meaning of “survive” applies in cll 3.2, 3.3 and 3.4 of the Will. While this appears to be a harsh result for Elijah and any other nephews and nieces born after the deceased’s death, the most likely explanation for it is the one given by Buckley J in Re James’ Will Trusts, ie that the deceased intended the ordinary meaning to apply but failed to appreciate the consequences in the event of her unexpected early death. Unfortunately, the court cannot re-write the Will to overcome it.

  6. For these reasons I do not accept the defendants’ contention that “survive” has the meaning of “live after”. In brief:

  1. As to [35] above, while the scheme of the will is to benefit the deceased’s nieces and nephews, she did so using the expression “survive me” to identify which of them would qualify for the gifts. The mere fact that her scheme was to benefit her nieces and nephews, and that there is a harsh result from applying the ordinary meaning of “outlive” rather than the less restrictive meaning of “live after”, is not enough to displace the ordinary meaning as explained above.

  2. As to [36] above, the opening words of cl 3.3 are equivocal at best, and I note also what is said at [42] above.

  3. As to [37], while the nephews and nieces are not named in cl 3.4, this is explained by the fact that the ordinary meaning of “survive me” includes those born after the will is made but before the deceased’s death who clearly could not be named. Further, cl 3.4 is in favour of the ordinary meaning as the intended meaning as noted at [43] above.

  4. As to [38], Brennan v Permanent Trustee turned on the terms of the will in that case and the relevant surrounding circumstances. It is necessary to focus on the terms of the Will and the circumstances in which it was made, which are significantly different.

  5. As to [39], for the reasons given above cl 7.4(ii) is not merely a direction in respect of the part of the estate which is applied to a beneficiary. I have explained above why cl 7.4(ii) is concerned with whether the beneficiary has turned 18, despite the contingency being that he or she reaches 25 in order for the interest to vest in possession, and that cl 7.4(ii) does not “bypass” the requirement that the beneficiary should attain 25. I have also explained above why cl 7.4(ii) is entirely consistent with cl 3.1.

Whether cl 3.4 provides for the creation of three separate trusts

  1. There are two possible alternative constructions of cl 3.4:

  1. One sub-part is to be shared between Greta’s children, one sub-part by Elissa’s children and one sub-part by Grant’s children, provided that they survive the deceased and reach the age of 25.

  2. Alternatively, three sub-parts are to be shared equally between all of the children referred to in (a).

  1. The plaintiff advances the first construction and the defendants the second. In my view, on a plain reading of cl 3.4, the three sub-parts which are allocated to the children of Greta, Elissa and Grant are to be shared between them as a single gift if they survive the deceased and reach 25 years of age. This follows from the words “I give three subparts to be shared between all…”.

  2. Clause 3.1 gives half of the estate to the trustee on trust to divide it into enough sub-parts to pay “those of the following gifts which take effect”. It also provides that no sub-parts are to be set aside for any gifts which do not take effect. In view of the conclusion reached above that each of the gifts in cll 3.3 and 3.4 to a child of the relevant sibling who survive the deceased is vested in interest at the date of her death, it follows that each of those gifts will take effect on the death of the deceased. Accordingly, cl 3.1 operated with effect from the date of death of the deceased to require one sub-part to be held on trust for the seventh defendant who benefits under cl 3.3, and three sub-parts to be held on trust for the first to sixth defendants who benefit under cl 3.4 (but in each case on the basis that their respective interests in the corpus do not vest in possession until they attain 25).

  3. It follows from the conclusion that cl 3.3 creates one trust and cl 3.4 creates another trust (rather than three separate trusts), that the Will does not provide for each beneficiary referred to in cll 3.3 and 3.4 to receive an equal share of the deceased’s estate as between each other.

  4. In relation to the trust arising under cl 3.3, the child of Drew who benefits (the seventh defendant) will be the sole beneficiary and he is entitled from the deceased’s death to an interest in the corpus of the one sub-part which is vested in interest but not in possession until he attains 25, and he will have a vested and indefeasible interest in the income from that one sub-part in the meantime.

  5. In relation to the trust arising under cl 3.4, all the children of Greta, Elissa and Grant who are beneficiaries under that clause (the first to sixth defendants) will share the three sub-parts to which that trust relates equally. They are each entitled from the deceased’s death to an equal interest in corpus of the three sub-parts, which is vested in interest but not in possession until each attains 25, but each will have an equal vested and indefeasible interest in the income from the three sub-parts in the meantime.

Third issue: whether cl 3.5 is merely a wish

  1. The parties agree that cl 3.5 is precatory given that it opens with the words “it is my wish”, and nothing in the words of cl 3.5 read in isolation or in context of the scheme of the Will suggests that the clause amounts to a direction, requirement or something imperative which will require that something shall be done: see eg. Hayes v National Heart Foundation of Australia [1976] 1 NSWLR 29 at 32G; Re Johnson [1939] 2 All ER 458 at 460. I agree with the parties’ submission on the proper construction of cl 3.5.

Answers to questions

  1. For the above reasons, the questions set out in the Joint Statement and the answers to them are as follows:

  1. Does clause 3.4 of the Will provide for the creation of three separate trusts in favour of the children of Greta, Elissa and Grant respectively?

Answer: No.

  1. Is the wish at clause 3.5 of the Will that moneys gifted to beneficiaries under clauses 3.3 and 3.4 of the Will are to be used for no other purpose than to assist: (a) in purchasing property for; and (b) in the education of the said beneficiaries and for no other purpose binding upon the Executor?

Answer: No.

  1. Whether the gifts made in the Will to children of the Deceased’s siblings: (a) is limited to those children of the Deceased’s siblings who were alive at the date of the Will; or (b) includes children of the Deceased’s siblings who were not alive at the date of the Will but who were alive at the date of the death of the Deceased; or (c) includes children of the Deceased’s siblings who were born after the date of the death of the Deceased.

Answer: (a) No; (b) Yes; (c) No.

  1. Does the Will make provision for any adopted, fostered or step-child of Drew, Greta, Elissa and Grant born after the death of the Deceased?

Answer: No.

  1. Is each sub-part of the Deceased’s estate referred to in clauses 3.2 and 3.4 of the Will a fund of equal value to each other sub-part?

Answer: Yes.

  1. Does the Will provide for each beneficiary referred to in clauses 3.2, 3.3 and 3.4 of the Will to receive an equal share in the Deceased’s estate as between each other?

Answer: No.

  1. If the answer to (6) above is in the negative, does the Will provide any mechanism for determining the entitlement of each beneficiary referred to in clauses 3.2, 3.3 and 3.4 of the Will?

Answer: Yes (see [61]–[62] above).

  1. In the event that the answer to paragraph (7) above is in the negative, does the Executor have an unfettered discretion with respect to benefits to be conferred upon each beneficiary referred to in clauses 3.2, 3.3 and 3.4 of the Will?

Answer: Does not arise.

Conclusion

  1. The Court will stand the matter over for the determination of the form of the declaration to be made to give effect to these reasons.

  2. As to costs, by order 5 of the orders made by the Court on 14 March 2024, Ms Gidley’s costs are to be paid out of the estate on an indemnity basis.  The parties were in agreement, and I am satisfied, that it was entirely proper for the plaintiff to commence these proceedings and the plaintiff’s costs should similarly be paid out of the estate on an indemnity basis.  The defendants sought an order, that was not opposed by the plaintiff, for their costs to be paid out of the estate on the ordinary basis, as agreed or assessed.  The Court was assisted by a contradictor and in the circumstances it is appropriate for the defendants’ costs to be paid out of the estate on the ordinary basis.

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Decision last updated: 23 April 2024

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Brennan v Permanent Trustee Co of NSW Ltd [1945] HCA 17
Currie v Glen [1936] HCA 1
Brennan v Permanent Trustee Co of NSW Ltd [1945] HCA 17