other-Exercise of power of appointment over settled property-Benefit of husband's will taken by wife-Subsequent will made by wife-Trust of settled property for beneficiaries under wife's first will-Originating summonsJurisdiction- Wills, Probate and Administration Act 1898 (N.S.W.) (No. 13 of 1898), sec. 23 - Married Women's Property Act 1901 (N.S.W.) (No. 45 of 1901), sec. 7- Equity Act 1901 (N.S.W.) (No. 24 of 1901), Fourth Schedule, r. 1.

In 1879 a husband settled certain real and personal property on such trusts as his wife, with his consent during his life and at her uncontrolled discretion after his death, might by deed or will appoint. In 1914, pursuant to an arrangement made between them, the husband and the wife on the same day made wills identical in terms to the extent that each left his or her property to the other for life with remainder to the children and grandchildren of the marriage. The will of the husband contained a statement that the property of which he was disposing included the property over which he had a power of appointment under the settlement of 1879. The will of the wife contained a statement that she expressly refrained from exercising her power of appoint- ment under the settlement of 1879. The husband died in 1915 without having revoked his will, and he left property valued at over £9,000 apart from any interest under the settlement. The wife died in 1923, having shortly before her death made another will by which she left all her property to one of her daughters. Up to the time of her death the wife received the income of the settled property and also of the other property left by the husband.

39 CLR 474

On an originating summons in the Supreme Court of New South Wales taken out by the trustee of the settlement (who also was executor of the husband's will, was appointed executor of the wife's will of 1914 and was administrator with the will annexed of the wife's will of 1923) Harvey C.J. in Eq. made a decretal order declaring that the trustee held the property comprised in the settlement upon the same trusts as those upon which that property would have been held if the wife had died without having revoked or altered the will made by her in 1914. On appeal to the High Court,

Held, by Isaacs, Higgins and Starke JJ. (Knox C.J. and Rich J. dissenting), By Isaacs J., on the ground that, although on the evidence the arrangement made in 1914 between the husband and the wife constituted a contract for mutual wills by reason of which, the wife having taken the benefit of the husband's will, her own property became affected by an equity in favour of the beneficiaries under her will of 1914, yet the settled property was not affected by such an equity:

By Higgins J., on…

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.

Continue reading Hudson v Gray

Details

AGLC: Hudson v Gray [1927] HCA 31
Case: [1927] HCA 31
Decision Date: 22 August 1927

CaseChat Overview and Summary

The case involved an appeal to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the distribution of settled property following the deaths of a husband and wife, Lawrence and Margaret Preston Hargrave. In 1914, the couple made identical wills, leaving their property to each other for life with remainder to their children and grandchildren. Margaret Hargrave also possessed a power of appointment over property settled in 1879. She expressly refrained from exercising this power in her 1914 will, while her husband's will stated it included property over which he had a power of appointment under the 1879 settlement. After the husband's death in 1915, Margaret received income from both his estate and the settled property. In 1923, shortly before her death, she made a new will leaving all her property to one daughter, Margaret Hudson.

The High Court was required to determine whether Margaret Hargrave's later will effectively disposed of the settled property, or if the property should be held according to the trusts established by her earlier mutual will of 1914. Specifically, the court had to consider whether an agreement for mutual wills existed between the husband and wife, whether Margaret Hargrave's acceptance of benefits under her husband's will created an equitable obligation, and whether her power of appointment over the settled property was affected by this agreement or her subsequent actions. The court also considered the procedural question of whether the Supreme Court had jurisdiction to make the declaration on an originating summons.

A majority of the High Court, comprising Isaacs, Higgins, and Starke JJ., allowed the appeal, reversing the decision of the Supreme Court. Isaacs J. found that while the arrangement constituted a contract for mutual wills and created an equity in favour of the beneficiaries under the 1914 will, this equity did not extend to the settled property, which was subject to Margaret Hargrave's power of appointment. Higgins J. held that there was no agreement for irrevocable wills and that the Supreme Court lacked jurisdiction to make the declaration on originating summons. Starke J. concluded that the arrangement did not create a trust over the settled property, as it was no more than a promise not to exercise the power of appointment, and even that promise was not sufficiently established by the evidence.

Consequently, the High Court ordered that the appeal be allowed and the decretal order of the Supreme Court of New South Wales be reversed. The effect of this decision was that Margaret Hudson, as the beneficiary under her mother's final will, was entitled to the settled property, as her mother's power of appointment had not been effectively fettered by the mutual wills agreement.

Orders