Holloway v Holloway
[2001] TASSC 111
•12 September 2001
[2001] TASSC 111
CITATION: Holloway v Holloway & Anor [2001] TASSC 111
PARTIES: HOLLOWAY, Dorothy May
v
HOLLOWAY, John Cottrell
WALKER, James Benson
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: M286/2000
DELIVERED ON: 12 September 2001
DELIVERED AT: Hobart
HEARING DATE: 25 July 2001
JUDGMENT OF: Cox CJ
CATCHWORDS:
Succession - Executors and administrators - Title and estate of - When and for what purposes deemed to be trustees - Executors - General principles - Distribution to beneficiaries - What amounts to the residue of the estate - Whether discretionary trusts activated.
Aust Dig Succession [257]
REPRESENTATION:
Counsel:
Applicant: D R Wallace
Respondents: N R Readett
Solicitors:
Applicant: Wallace Wilkinson & Webster
Respondents: Clerk Walker & Stops
Judgment Number: [2001] TASSC 111
Number of paragraphs: 7
Serial No 111/2001
File No M286/2000
DOROTHY MAY HOLLOWAY v JOHN COTTRELL HOLLOWAY
and JAMES BENSON WALKER
REASONS FOR JUDGMENT COX CJ
12 September 2001
The applicant seeks the answer to the following questions:
1Whether on the true construction of the will of Victor Holloway dated 10 December 1997, Dorothy May Holloway is the trustee of the trusts (if any) created by cl 18 of the will and not John Cottrell Holloway or James Benson Walker.
2 Whether all the estate of Victor Holloway other than those bequests in the estate being
(a)the furniture and articles of household or domestic use provided for in cl 4 of the will; and
(b)the grandchildren fund of $10,000 provided for in cl 5 of the will; and
(c)the proceeds of and the bequests provided for in cl 6 of the will; and
(d)the bequest provided for in cl 22 of the will; and
(e)the loan provided for in cl 23 of the will; and
(f)after payment of the testator's just debts, funeral and testamentary expenses and all death or succession duties, state or federal,
constitute the residue of the estate and is held pursuant to the provisions of cl 7 and/or cl 18 of the will.
3Whether the reference to the words "my trustees" first occurring in cl 7 of the will is reference to John Cottrell Holloway and James Benson Walker or Dorothy May Holloway.
4Whether the reference to the words "my trustees" secondly occurring in cl 7 of the will is a reference to John Cottrell Holloway and James Benson Walker or Dorothy May Holloway.
By cl 2 of his will, the testator appointed his brother, John Cottrell Holloway, and his solicitor, James Benson Walker, executors of his will and "Trustees with the exception of the trusts created pursuant to clause 18 hereof". By cl 4 he gave directions as to the disposition of his furniture and personal effects, the balance not otherwise dealt with to form part of his residuary estate. By cl 5 he gave and bequeathed $10,000 to his trustees for the benefit of his grandchildren and by cl 6 made specific bequests of the proceeds of certain assurance policies to his son, Mathew, and to one of his daughters, Emma. Clause 7 is as follows:
"Distribution of Balance of Estate
7 I GIVE DEVISE BEQUEATH AND APPOINT all my property both real and personal whatsoever wheresoever and of what nature or kind soever including any property over which I may have a power of appointment or disposition unto my trustees UPON TRUST to retain or realise the same and out of the proceeds of such realisation to pay my just debts funeral and testamentary expenses and all death estate or succession duties State or Federal upon the whole of my dutiable estate and to hold the residue UPON TRUST to apply such of the income and capital as my trustees in their sole and absolute discretion shall deem appropriate for the benefit of my wife DOROTHY MAY HOLLOWAY as primary beneficiary under the terms of the trust created pursuant to the provisions of clause 18 hereof."
Clause 8 was as follows:
"Alternate Provision Clause
8 I DIRECT that on the death of my said wife DOROTHY MAY HOLLOWAY the accrued income and all capital remaining in the trust shall be held by the trustees UPON TRUST to divide the same into three (3) equal parts and:
(a)to hold one (1) such part UPON TRUST for my son MATHEW JAMES HOLLOWAY as a beneficiary under the terms of the trust created pursuant to clause 18 hereof;
(b)should she survive me and attain the age of forty (40) years to hold one (1) such part UPON TRUST for my daughter RACHEL LOUISE HOLLOWAY as beneficiary under the terms of the trust created pursuant to clause 1 hereof; and
(c)should she survive me and attain the age of twenty one (21) years to hold the remaining one (1) part UPON TRUST for my daughter EMMA ELISSA HOLLOWAY as beneficiary under the terms of the trust created pursuant to clause 18 hereof."
The next clause of immediate significance is cl 16, which provided as follows:
"Election for Primary Beneficiary
16 My Executors shall have the discretion to distribute all or any part of the share of my estate for which the primary beneficiary would otherwise have been the primary beneficiary of a Trust created by this Will to:
(a)any other Trust, the beneficiaries of which are confined to all or some of the beneficiaries that would otherwise have been the beneficiaries of the Trust under this Will; or
(b) the primary beneficiary personally."
Clause 18 relevantly provided:
"Terms of Trusts
18 In respect of each of the Trusts created under this my Will that include a primary beneficiary specified in this Will, I declare that the following terms shall apply:
Beneficiaries:
(a) the beneficiaries of the Trust shall be:
(i) the relevant primary beneficiary;
(ii) the primary beneficiary's spouse and parents;
(iii) the children, remoter issue and dependants of the persons specified in the preceding subparagraphs;
(iv) the spouse of any of the persons specified in the preceding subparagraphs;
(v) the entities (including companies and Trusts) in which any of the above beneficiaries are a director or directly or indirectly have an absolute, contingent or expectant interest;
(vi) charitable or religious funds or institutions:
Distribution of Income or Capital:
(b)(i) The income and capital (or any category of the income or capital) of the Trust may in each year be paid or allocated to or applied for the benefit of such of the beneficiaries that the Trustee might select from time to time or (in the case of the income) may be accumulated as an addition to the capital of the Trust;
(ii)At any time when the Trustee has been appointed by virtue of subparagraph (f)(iii), the Trustee shall either accumulate the Trust income or distribute the income to such beneficiaries as the Trustee considers is in the best interests of the primary beneficiary or all of the residuary beneficiaries;
…
Appointment and Removal of Trustee:
(f)(i) Subject to subparagraph (iii), the primary beneficiary or the residuary beneficiaries shall be the Trustee or the Trustees;
(ii) The primary beneficiary or the residuary beneficiaries may appoint such other person as he, she or they choose to be an additional or replacement Trustee and may subsequently remove the person as a, or the, Trustee;
(iii) Any Trustee who is also the primary beneficiary or a residuary beneficiary and who, by reasons of disability, bankruptcy or otherwise, is unable to act or to continue to act as Trustee shall not be appointed as Trustee or shall be deemed to have resigned as Trustee (as the case may be), and my Executors shall be the Trustee, or one of the Trustees (as the case may be) in his, her or its place;
Vesting of Trust:
(g)The Trust shall vest on the earlier of a date nominated in writing by the Trustee or at the expiration of eighty (80) years from the date of my death and shall vest in such beneficiaries and in such proportions as the primary beneficiary may by instrument in writing nominate provided that if no such nomination is made then equally between the residuary beneficiaries;
Interpretation:
(h)In this Clause unless the context otherwise requires the following expressions shall have the following meanings:
…
'residuary
beneficiary' means the beneficiaries whose appointment by the primary beneficiary by deed or Will as residuary beneficiaries has taken effect or, if the primary beneficiary dies without making such an appointment, such of the beneficiaries entitled to the residuary estate of the primary beneficiary and a residuary beneficiary may similarly be solely or jointly succeeded as a residuary beneficiary;
… "
The applicant contends that as she is nominated as the primary beneficiary in cl 7 and as, pursuant to cl 18, she is appointed trustee of the trust created by that clause, she is trustee of the residuary estate for the purposes of cl 7 and is entitled to call for the residue.
In my view, the intention of the testator was to retain the respondents as trustees of the residuary estate in accordance with cl 7, and cl 18 only comes into play if in their sole and absolute discretion they determine to apply the whole or some part of the capital and/or income of that fund to the benefit of Mrs Holloway in her capacity as primary beneficiary under the terms of the trust created pursuant to the provisions of cl 18. In respect of the sum so applied, a trust is created pursuant to cl 18 of which she is trustee and its terms, so far as the distribution of the income and capital of that sum is concerned, are set out in cl 18(b). In this way, Mrs Holloway, should the respondent trustees determine to activate that trust by the appropriation of capital and/or income from the residuary fund, has the discretion as trustee thereof to pay the same to herself and/or to any other beneficiary nominated in the will as a beneficiary under the trusts created by cl 18. Certain tax advantages flow from such a scheme.
Support for the contention that the respondents remain the trustees for the purposes of cl 7 can be found in the terms of cl 8. That clause contemplates that after Mrs Holloway's death, if there is any remaining residue, it is to be held by them upon trust to divide it into three parts and to hold each part for a named child as a beneficiary under the terms of the trust created by cl 18. If Mrs Holloway were trustee of the residuary estate under cl 7, some other person would be required to act as trustee upon her death. There seems no good reason to read the expression "the Trustees" differently in each clause. Furthermore, the respondents are nominated as trustees for all purposes under the will except for the purposes of cl 18.
The draftsman of the will retained an option to bypass the need for the creation of a trust under cl 18 by the insertion of cl 16. The effect of that clause was to give the respondents, as trustees of the will (therein inappropriately called "Executors", although the respondents are in fact both executors and trustees), the option of avoiding the creation of a trust under cl 18 in respect of any particular distribution to Mrs Holloway of a sum from the residuary estate by exercising a discretion to distribute it to her personally. A further option was retained of bypassing her and distributing all or any part of the residuary estate to any other trust in favour of other nominated beneficiaries. In either event, the respondents remained trustees and retained the discretion to avoid the creation of a trust of which she was trustee.
In my opinion, the questions should be answered as follows:
1 Yes.
2The estate other than the assets listed in question 2(a) - (f) and other than any assets already distributed by the respondent trustees constitutes the residue of the estate and is held pursuant to the provisions of cl 7 of the will.
3 Yes.
4 Yes.
0
0
0