Ian Arthur Reinhard v Robyn Lynette Denkel

[2024] NSWSC 925

Supreme Court

New South Wales

Medium Neutral Citation:

Ian Arthur Reinhard v Robyn Lynette Denkel [2024] NSWSC 925

Hearing dates:

27 June, 2 and 26 July 2024

Date of orders:

31 July 2024

Decision date:

31 July 2024

Jurisdiction:

Equity

Before:

Williams J

Decision:

See orders at [73].

Catchwords:

SUCCESSION – wills – application under s 86A of the Trustee Act 1925 (NSW) for approval of arrangement to vary testamentary trusts created by will dated 1925 by bringing forward the vesting date which would otherwise occur in 2034 – Held: arrangement approved.

SUCCESSION – wills – construction – whether reference to “child” and “children” in will made in 1925 included adopted child or children.

Legislation Cited:

Adoption Act 2000 (NSW) ss 5, 98, sch 3

Adoption of Children Act 1965 (NSW) ss 5, 35, 36

Child Welfare Act 1923 (NSW) s 127

Child Welfare Act 1939 (NSW) s 168

Trustee Act 1925 (NSW) ss 81, 86A, 86B, 86C, div 3A

Uniform Civil Procedure Rules 2005 (NSW) r 6.24(1)

Cases Cited:

Campbell v Campbell [2022] NSWSC 554

Cisera v Cisera [2023] NSWSC 1507

Coote v Clarke [2007] WASC 97

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

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

Harris v Ashdown (1985) 3 NSWLR 193

In Re Plator Nominees [2012] VSC 284

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

Marley v Rawlings [2015] AC 129; [2014] UKSC 2

Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387; [2012] VSCA 77

Reinhard v Bell [2015] NSWSC 818

Re PDC [2021] NSWSC 1701

Wright v Stevens [2018] NSWSC 548

Texts Cited:

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

Category:

Principal judgment

Parties:

Ian Arthur Reinhard as Trustee of the Estate of the late William Gotlett Reinhard (First Plaintiff)
Warren Reinhard as Trustee of the Estate of the late William Gotlett Reinhard (Second Plaintiff)
Robyn Lynette Denkel (First Defendant)
Adrian Brett Johnson (Second Defendant)
Denise Lorraine McConnell (Third Defendant)
Bradley John Reinhard (Fourth Defendant)
Glenn Francis Reinhard (Fifth Defendant)
Murry Frederick Reinhard (Sixth Defendant)
Andrew William Reinhard (Seventh Defendant)
Ronald Joseph Reinhard (Eighth Defendant)
Ann Elizabeth Gilberthorpe (Nineth Defendant)
Garry John Reinhard (Tenth Defendant)
Janice Kaye Lithgow (Eleventh Defendant)
John Richard Trowell (Twelfth Defendant)
Malcolm Graham Trowell (Thirteenth Defendant)
Maureen Frances Lavina Bell (Fourteenth Defendant)
Debbra Ann Bell (Fifteenth Defendant)
Allan William Bell (Sixteenth Defendant)
James Herbert Bell (Seventeenth Defendant)
Gae Parmenter (Applicant for Joinder)

Representation:

Counsel:
Ms G Mahony SC with Ms A Merrett (Plaintiffs)
Mr W Burke (Solicitor) (Defendants)
Mr P Bolster (Applicant for Joinder)

Solicitors:
Victoria Ann Baker (Plaintiffs)
Burke & Baker Lawyers (Defendants)
Paine Ross & Co (Applicant for Joinder)

File Number(s):

2024/83397

Publication restriction:

N/A

JUDGMENT

Introduction

1. These reasons for judgment concern an application under s 86A of the Trustee Act 1925 (NSW) for the Court to approve an arrangement to vary the last will of the late William Gotlett Reinhard, who died on 2 January 1929, so as to bring forward the vesting date for interests in real property, or the proceeds of sale thereof, that are the subject of the testamentary trusts established by that will (the trust properties).

2. During the hearing of that application, an issue arose as to whether, on the proper construction of the will dated 2 May 1925, an adopted great-grandchild of the testator was a person whose rights would be affected by the order sought, and who was therefore a necessary party to the proceedings. After being notified of the proceedings at the direction of the Court, the adopted great-grandchild applied to be joined as a party to the proceedings. The existing parties opposed that joinder application.

3. For the reasons that follow, I have determined that the adopted great-grandchild is not a person whose rights would be affected by the proposed order approving the arrangement to vary the vesting date of the testamentary trusts established by the will. It is therefore not necessary that she be joined as a party to the proceedings, and her joinder application must be dismissed. I have further determined that, in respect of each of the testamentary trusts, the Court has the power under s 86A of the Trustee Act to make an order approving the arrangement to vary the vesting date by bringing it forward to the business day immediately following the publication of these reasons, and that it is appropriate to make those orders in all the circumstances of this case.

The testator’s last will

4. The testator, William Gotlett Reinhard, died on 2 January 1929.

5. The testator’s last will was made on 2 May 1925, and varied by a codicil made on 30 January 1928.

6. The chapeau to the will reads:

“THIS IS THE LAST WILL AND TESTAMENT of me WILLIAM GOTLETT REINHARD of Oddfield near Wellington in the State of New South Wales, Farmer. I HEREBY REVOKE all former testamentary dispositions heretofore made by me and declare this to be my last Will and Testament.”

7. The testator appointed three of his sons as his executors and trustees, referred to in the will as “my Trustees”.

8. The will then provides:

“I FURTHER DECLARE that the Estates or Interests created or given by this my Will in my real estate shall not vest indefeasibly in any beneficiary thereunder until the period of twenty one years after the death of the last survivor of my children or grandchildren who shall be alive at the date of my death.”

9. It is convenient to refer to that clause as the postponement clause.

10. As I will explain below, the vesting date stipulated in the postponement clause has not yet arrived.

11. The will then provides:

“I DEVISE to my Trustees all my real estate in trust for the benefit primarily of my respective children in the following shares namely: -

1.   One undivided moiety of my estate known as “Ringaroo” farm for my son Frederick Charles Reinhard;

2.   One undivided moiety of my said “Ringaroo” farm for my son Clarence Offner Reinhard;

3.   One undivided moiety of my farm known as “Black Rock” for my son Sydney George Reinhard;

4.   One undivided moiety of my said farm”Black Rock” for my son Joseph Henry Reinhard;

5.   My freehold land situate in Maughan Street, Wellington, consisting of a Produce Store and my Motor Garage situate in Arthur Street, Wellington, for my son Herbert Christopher Reinhard;

6.   My freehold land in Maughan Street, Wellington, upon which is erected a fruit shop for my son John Thomas Reinhard;

7.   One undivided moiety of my freehold land in Maughan and Arthur Streets, Wellington, now occupied by Daniel. V. Roddy as a store and by W. P. Kelley as a Solicitor’s Office to my daughter Linda Reinhard;

8.   And the other undivided moiety of the same to my daughter Mary Catherine Reinhard;

UPON THE TRUSTS and subject to the powers and provisions following …”

12. Before summarising the terms of those trusts, it is convenient to mention that the codicil executed by the testator on 30 January 1928 revokes all devises and bequests in the will in favour of the testator’s son Joseph Henry Reinhard, including the bequest of an interest in the “Black Rock” farm in sub-clause (4) above, and provides:

“I GIVE DEVISE AND BEQUEATH to my Trustees IN TRUST for my son Arthur Theodore Reinhard all real and personal property by my said last Will and Testament devised and bequeathed to the said Joseph Henry Reinhard and which devises and bequests in favor of the said Joseph Henry Reinhard I now revoke, UPON THE TRUSTS and subject to the same powers and provisions as contained in the said Will in favor of the said Joseph Henry Reinhard …”

13. The will provides that:

“… my Trustees shall permit each of my said children respectively to use occupy and enjoy the respective share of my real estate allotted to each of them for life …”

14. The reference to “my said children” is clearly a reference to the children named in sub-clauses (1) to (8) above, subject to the codicil which affected sub-clause (4).

15. The will then provides for the trusts on which the specified shares in real property are to be held following the death of each of the testator’s children who is named as a beneficiary of one of those shares (emphasis added):

“… from and after the death of any of my said children UPON TRUST to enter upon and manage in manner aforesaid the lands the subject of the share of such child and in their uncontrolled discretion to pay or apply the rents and profits so arising to or towards the maintenance support and advancement of the widow (if any, but not the widower) and children (if any) of such child in the proportion of one third to such widow and two thirds among such children, and upon the death of such widow or if no such widow has survived my said child then the whole among such children of my said child in equal shares as tenants in common for their respective lives until the expiration of the period of postponment [sic] of distribution and then absolutely among those of them then living of the children of those who may then be dead, taking their parent’s share, in equal shares per stirpes and not per capita; PROVIDED THAT in the event of the death of any of my said children without issue or unmarried, then, subject to the provisions hereinbefore made for the widow of any son so dying, the income of the share of such child shall be divided by my Trustees among the others of my children (with the exception of Arthur Theodore Reinhard and William Offner Reinhard) in the same manner and subject to the same limitations and restrictions as if the share of the said child so dying without issue had formed part of the original shares of my said other children.”

16. In Reinhard v Bell, this Court declared that, upon the true construction of the will, the emphasised part of the clause that I have extracted at [15] above is to be read as follows:[1]

“until the expiration of the period of postpone[e]ment of distribution and then absolutely among those of them then living or the children of those who may then be dead taking their parent’s share in equal shares per stirpes and not per capita”

1. [2015] NSWSC 818 at [35] (Darke J).

17. Darke J held that “those of them then living” refers to the testator’s grandchildren (being the children of the testator’s “said children” who are named in items 1 to 8 of the will, as varied by the codicil, as the beneficiaries of a specific trust property or a share in a specific trust property) who are living when the period of postponement expires, and that “those who may then be dead” refers to the testator’s grandchildren who fall within that class but who are deceased when the postponement period expires. [2] Thus, subject to one qualification, when the vesting date arrives, each share in each trust property identified in sub-clauses (1) to (8) is given absolutely to the testator’s surviving grandchildren, and those of his surviving great-grandchildren whose parents have already died, to the extent that those surviving grandchildren and great-grandchildren are the children and grandchildren (respectively) of the testator’s child named in the will and the codicil as the beneficiary of an interest in that trust property. [3] Darke J held that, properly construed, the will did not give any interest in the trust properties to surviving descendants of the testator beyond those persons. [4]

    2. Ibid at [31].

    3. See [15] above.

    4. [2015] NSWSC 818 at [30]-[31].

18. The qualification referred to immediately above is derived from the express proviso in the clause of the will set out at [15] above. That proviso excludes from the class of the testator’s grandchildren and great-grandchildren in whom interests in the trust properties vest on the expiry of the postponement period any grandchild who is not the “issue” of the testator’s child, or who was born to an unmarried child of the testator, and thereby also excludes any children of such a grandchild of the testator.

19. In the case of the farm “Ringaroo”, the trusts for the benefit of Frederick Charles Reinhard and Clarence Offner Reinhard are subject to: (a) a right for the testator’s wife and unmarried daughters to reside in the residence on that farm rent-free for so long as they remained unmarried; and (b) a provision for each of the testator’s wife and William Offner Reinhard to receive a specified yearly rent charge.

20. The will makes specific bequests in relation to the testator’s household furniture and effects, his motor car, his farming plant and livestock on each of the two farms, his cash at bank, and the proceeds of any life insurance. The will then provides:

“ALL THE REST AND RESIDUE of my real and personal estate not otherwise hereinbefore disposed of I GIVE DEVISE AND BEQUEATH to my following children Frederick Charles Reinhard, Herbert Christopher Reinhard, Clarence Offner Reinhard, Joseph Henry Reinhard, John Thomas Reinhard, Linda Reinhard and Mary Catherine Reinhard in equal shares and share alike as tenants in common”

21. The will contains a direction to the Trustees, to the extent that they are administering the trust properties in their capacity as Trustees, to carry on farming, grazing and fruit growing activities on “Ringaroo” and “Black Rock”, “it being my desire that these properties should at their discretion be carried on and worked in the same manner as they are at the present time”.

The testator’s descendants and the trust properties

22. The evidence discloses that the following persons are the children, grandchildren and great-grandchildren of the testator:

Testator’s child	Testator’s grandchild	Testator’s great-grandchild
William Offner Reinhard Deceased 1949	-	-
Rose Martha Reinhard Deceased 1898	-	-
Joseph Henry Reinhard Deceased 1954	Laurence Clifford Reinhard Born 1921 Deceased 1960	-
	Oswald Joseph Reinhard Born 1917 Deceased 1980	Ronald Joseph Reinhard Living – 71 years
		Ann Elizabeth Gilberthorpe Living – 69 years
	Majorie Dawn Reinhard (Trowell/Stapleton) Born 1919 Deceased 2012	Janice Lithgow (Trowell) Living – 76 years
		John Trowell Living – 74 years
		Malcolm Trowell Living – 71 years
Clarence Offner Reinhard Deceased 1955	Gwenneth June Sandilands Born 1934 Deceased 1993	-
	Kenneth William Reinhard Born 1939 Deceased 2022	Sarah Jane Reinhard Born 1977 Deceased 2010
		Andrew William Reinhard Living – 43 years
John Thomas Reinhard Deceased 1959	Evelyn Gladys Ivy Reinhard (Hasenam) Born 1923 Deceased 1947	-
	Keith Frederick Reinhard Born 1928 Deceased 26 May 2013	Bradley John Reinhard Living – 70 years
		Glenn Francis Reinhard Living – 69 years
		Murry Frederick Reinhard Living – 62 years
	Edwin John William Reinhard Born 1917 Deceased 1955	Gae Parmenter (adopted) Living – 70 years
	Clarice Alma Rose Reinhard (Johnson) Born 1919 Deceased 1995	Denise Lorraine McConnell Living – 76 years
		Robyn Lynette Denkel Living – 70 years
		Adrian Brett Johnson Living – 59 years
Herbert Christopher Reinhard Deceased 1959	Stanley Herbert Reinhard Born 1932 Deceased 1954	Gary John Reinhard Living – 71 years
	Maureen Frances Lavina Reinhard (Bell) Born 1934 Living – 90 years	Debbra Ann Bell Living – 68 years
		Allan William Bell Living – 60 years
		James Herbert Bell Living – 63 years
Arthur Theodore Reinhard Deceased 1959	Norman Victor Reinhard Born 1924 Deceased 2010	Ian Arthur Reinhard Living – 71 years
		Warren Reinhard Living – 67 years
Sydney George Reinhard Deceased 1962	Joan Florence Zell (adopted) Deceased 1980
Frederick Charles Reinhard Deceased 1966	-	-
Catherine Mary Reinhard Deceased 1969	-	-
Linda Fanny Reinhard Deceased 1976	-	-

23. The evidence before the Court is to the effect that William Offner Reinhard was born out of wedlock in 1874, and that there was some doubt about his paternity. The testator’s will refers to William Offner Reinhard as “my son”, and also as one of “my children”, from which I infer that the testator recognised and treated him as a son during his lifetime. However, William Offner Reinhard was not amongst the class of the testator’s children for whose benefit a share in any of the trust properties was held under the trusts established by the will.

24. The testator’s daughter Rose Martha Reinhard predeceased him, and so is not mentioned in his last will.

25. As I have noted above, the testator’s son Joseph Henry Reinhard was excluded from any interest in the trust properties by the codicil executed on 30 January 1928. That codicil provides for a gift to Joseph Henry Reinhard of £500 payable within 12 months after the testator’s death.

26. Each of the testator’s other children were beneficiaries of a specified trust property, or a share in a specified trust property.

27. The evidence summarised above discloses that, at the time of his death on 2 January 1929, the testator was survived by all of his children other than Rose Martha Reinhard, and by eight grandchildren. The evidence does not disclose whether or not the testator’s adopted grandchild Joan Florence Zell had been born and adopted by the testator’s son Sydney George Reinhard prior to the death of the testator. In any event, the last survivor of the testator’s children and grandchildren who were living as at the date of the testator’s death was Keith Frederick Reinhard, who died on 26 May 2013. The interests in the trust properties are therefore due to vest on 26 May 2034 in accordance with the postponement clause.

28. In 2015, this Court made orders under s 81 of the Trustee Act conferring on the trustees the power to sell the trust properties. Four of the six properties were subsequently sold. The Trustees are holding the sale proceeds of those properties, and the farms “Ringaroo” and “Black Rock”, on the terms of the testamentary trusts. The estimated value of “Ringaroo” is approximately $1.771 million. The estimated value of “Black Rock” is approximately $2.525 million.

29. On the basis of the evidence summarised above, the interests in each of the trust properties (or the proceeds of sale thereof) will vest in some combination of the following persons on the vesting date of 26 May 2034:

1. if she is alive on the vesting date, Maureen Frances Lavina Reinhard (Bell), who is presently 90 years old and is the only living grandchild of the testator whose parent – Herbert Christopher Reinhard – was a child of the testator for whose benefit an interest in some of the Maughan Street properties was devised to the Trustees to be held on trust;

2. if Maureen Frances Lavina Reinhard (Bell) passes away prior to the vesting date, her children Debbra Ann Bell (presently aged 68 years), Allan William Bell (presently aged 60 years), and James Herbert Bell (presently aged 63 years), if they are alive on the vesting date;

3. if he is alive on the vesting date, Gary John Reinhard (presently aged 71 years), who is a grandchild of Herbert Christopher Reinhard;

4. if he is alive on the vesting date, Andrew William Reinhard (presently aged 43 years), who is the only surviving grandchild of Clarence Offner Reinhard, who was a child of the testator for whose benefit an interest in a share in the “Ringaroo” farm was devised to the Trustees to be held on trust;

5. if they are alive on the vesting date, Bradley John Reinhard (presently aged 70 years), Glenn Francis Reinhard (presently aged 69 years), Murry Frederick Reinhard (Presently aged 62 years), Denise Lorraine McConnell (presently aged 76 years), Robyn Lynette Denkel (presently aged 70 years), and Adrian Brett Johnson (presently aged 59 years), each of whom is a grandchild of John Thomas Reinhard, who was a child of the testator for whose benefit an interest in one of the Maughan Street properties was devised to the Trustees to be held on trust; and

1. if they are alive on the vesting date, Ian Arthur Reinhard (presently aged 71 years) and Warren Reinhard (presently aged 67 years), each of whom is a grandchild of Arthur Theodore Reinhard, who was a child of the testator for whose benefit an interest in a share in the “Black Rock” farm was devised to the Trustees to be held on trust under the will as varied by the codicil.

30. It is beyond the scope of these proceedings for me to express any view about whether those persons will also become entitled on the vesting date to the interests in the trust properties bequeathed to Sydney George Reinhard, whose adopted daughter is deceased, and to Frederick Charles Reinhard, Catherine Mary Reinhard, and Linda Fanny Reinhard, each of whom died without having had children. [5]

    5. See [15] above.

31. Ms Parmenter is the adopted child of Edwin John William Reinhard, who was a child of the testator’s child John Thomas Reinhard. Ms Parmenter contends that she is also a person in whom an interest in one or more of the trust properties will vest, if she is alive on the vesting date.

The nature of these proceedings and the necessary parties

32. Ian Arthur Reinhard and Warren Reinhard have been the Trustees of the testamentary trusts since 1986. They are the plaintiffs in these proceedings.

33. The plaintiffs joined each of the other persons listed at [29] above as defendants to these proceedings. The plaintiffs also joined the surviving grandchildren of the testator’s child Joseph Henry Reinhard, notwithstanding that Joseph Henry Reinhard did not receive an interest in the trust properties under the will as varied by the codicil. It is not apparent to me that the surviving grandchildren of Joseph Henry Reinhard stand to receive any interest in any trust property on the vesting date, but it is not necessary for me to express any final view about that for the purpose of these proceedings.

34. All of the defendants above have been represented in these proceedings by Mr Burke, solicitor. All of those defendants consent to the order sought by the plaintiffs that the testator’s will be varied pursuant to s 86A of the Trustee Act by deleting the words “until the period of twenty one years after the death of the last survivor of my children or grandchildren who shall be alive at the date of my death” in the postponement clause and replacing those words with the words “until the first day of June in the year 2024” or such other date as the Court thinks fit. In oral submissions, the plaintiffs invited the Court to nominate as the varied vesting date the first business day after the date on which these proceedings are determined.

35. The appropriate form of order is not an order whereby the Court itself varies the terms of the trusts, but an order whereby the Court approves an arrangement to vary the trusts. [6] Focussing on the substance of the relief sought, the practical effect is to bring forward the vesting date of the trusts, thereby reducing the risk that the gifts of interests in the trust properties will fail if some or all of the persons referred to at [29] pass away before 26 May 2034. That risk arises from the present age of those persons, the serious health problems that the evidence reveals some of them have already experienced, and the construction of the will in Reinhard v Bell. The consequence of that construction is that, if a child of the testator who is named as the beneficiary of a share in specified real property of the testator was married and had children (“issue”), but those children and their children die prior to the vesting date, the relevant share in the specified property will not vest in the next generation of descendants of that child of the testator. [7]

    6. Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387; [2012] VSCA 77 (Perpetual Trustees v Barns) at [18] and [26]-[27] (Williams AJA, Buchanan and Bongiorno JJA agreeing); Cisera v Cisera [2023] NSWSC 1507 at [57]-[59] (Parker J).

    7. See [15]-[18] above.

36. The plaintiffs did not join Ms Parmenter as a defendant to the proceedings. Nor was Ms Parmenter notified of the proceedings. It first came to my attention that Ms Parmenter was an adopted child of the testator’s grandchild, Edwin John William Reinhard, after judgment had been reserved. Neither the plaintiffs nor the defendants had drawn this to my attention in their written submissions or during the hearing on 27 June 2024. I caused the matter to be re-listed on 2 July 2024 for the purpose of hearing submissions from the parties about whether Ms Parmenter was a necessary party to the proceedings. The Court was informed that the plaintiffs do not consider that Ms Parmenter is a necessary party to the proceedings because, by reason of s 168 of the Child Welfare Act 1939 (NSW) and on the proper construction of the will, Ms Parmenter is not a person who may become entitled to any interest in the trust properties on the vesting date. However, the plaintiffs and the defendants preferred to have that issue determined after Ms Parmenter had been notified of these proceedings and given an opportunity to apply to be joined as a party to the proceedings in the event that she contended that she was a necessary party.

37. After being notified of the proceedings, Ms Parmenter did apply to be joined as a defendant. The plaintiffs maintained their contention that Ms Parmenter is not a necessary party to the proceedings, and opposed Ms Parmenter’s joinder application. The defendants joined the plaintiffs in that opposition.

38. Whether or not Ms Parmenter is a necessary party depends on whether her rights or liabilities will be directly affected by the relief sought by the plaintiffs. [8] That depends on whether Ms Parmenter is a person who will become entitled to an interest in the trust properties if she is alive on the vesting date.

    8. Uniform Civil Procedure Rules 2005 (NSW), r 6.24(1); John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19, especially at [131] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).

39. Ms Parmenter has given evidence that she was born in Queensland in 1953 and adopted in 1954 pursuant to a private arrangement between her birth parents and adoptive parents. It appears from the documents annexed to her affidavit that the order for her adoption was made in New South Wales.

40. Adoption was introduced in New South Wales by the Child Welfare Act 1923 (NSW), which commenced on 30 November 1923 (the 1923 Act). By the time of Ms Parmenter’s adoption in 1954, the 1923 Act had been repealed, and the adoption of children was governed by the Child Welfare Act 1939 (NSW) (the 1939 Act).

41. Section 168 of the 1939 Act relevantly provided:

“When an order of adoption is made, for all purposes civil and criminal, and as regards all legal and equitable rights and liabilities, the adopted child shall be deemed to be a child of the adopting parent, and the adopting parent shall be deemed to be a parent of the adopted child, as if such child had been born to such adopting parent in lawful wedlock, and the order of adoption shall terminate all rights and liabilities existing between the child and his natural parents other than the right of the child to take property as heir or next of kin of his natural parents or of their lineal or collateral kindred:

Provided always that such adopted child shall not by such adoption–

(a)   acquire any right, title or interest in any property under any deed, will or instrument whatsoever made or executed prior to the date of such order of adoption unless it is expressly so stated in such deed, will or instrument;

…”

42. It is common ground between the parties that the savings provisions in subsequent adoption legislation have the effect that s 168 of the 1939 Act continues to apply to the adoption of Ms Parmenter. [9] Counsel for Ms Parmenter therefore conceded that she is not a person who might be entitled to an interest in the trust properties on the vesting date unless the Court finds that it is “expressly so stated” in the testator’s last will that the “children” of the testator’s children, and their children, for whose benefit interests in the testator’s properties are held on the testamentary trusts, include adopted children.

    9. Adoption of Children Act 1965 (NSW), ss 5, 35 and 36; Adoption Act 2000 (NSW), ss 5 and 98, sch 3.

43. The task of the Court in construing the word “children” in the phrase “the children of those who may then be dead”, [10] in the context of the will as a whole, is to ascertain and give effect to the intention of the testator. That intention is to be ascertained objectively on the basis of the language of the will and the meaning that it would have conveyed to a reasonable person with knowledge of the objective circumstances surrounding the testator at the time the will was made. [11]

    10. See [15]-[17] above.

    11. Fell v Fell (1922) 31 CLR 268 at 273-276; [1922] HCA 55 (Issacs J); Marley v Rawlings [2015] AC 129; [2014] UKSC 2 at [17]-[26] (Lord Neuberger P, Lords Clarke, Sumption and Carnwath agreeing); Farrelly v Phillips (2017) 128 SASR 502; [2017] SASCFC 111 at [23]-[24] (Stanley J, Kourakis CJ agreeing and Nicholson J also agreeing as to the principles of construction at [60]); Wright v Stevens [2018] NSWSC 548 at [177]-[185] (Hallen J) and the authorities there referred to; P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [31.20]-[31.40].

44. There is scant evidence of the circumstances surrounding the testator at the time the will was made on 2 May 1925.

45. It was common ground between the parties that the length and complexity of the will, together with the fact that the testator’s signature was witnessed by a solicitor and a law clerk, give rise to an inference that the will was drafted by solicitors. I agree that the length and complexity of the will supports that inference on the balance of probabilities.

46. At the time that he made his last will on 2 May 1925, adoption was a relatively new feature of society in New South Wales, having been introduced by the 1923 Act which had commenced on 30 November 1923. [12]

    12. See [40] above.

47. Section 127 of the 1923 Act was in the same terms as s 168 of the 1939 Act. [13]

    13. See [41] above.

48. The testator did not have any adopted children. As I have already mentioned, there is no evidence about whether he had an adopted grandchild at the time he made his last will. [14]

    14. See [27] above.

49. It was submitted on behalf of Ms Parmenter that the Court should attribute to the testator an intention that the words “child” and “children”, where used in his will, included adopted children and, by extension, adopted grandchildren and great-grandchildren of the testator. It was submitted that it was plain from the structure and substance of the provisions of the will that the testator intended to exert control over his estate for the longest time possible into the future without infringing the rule against perpetuities, and that he intended that the interests in his properties would ultimately vest in persons falling within the class of his grandchildren and/or great-grandchildren stipulated in the will, many or all of whom had not yet been born and so were not known to him at the time that he made his will, and at the time that he died. It was submitted that the testator’s intention to defer the vesting date for as long as possible reflected a desire to “cast a wide net” in stipulating who would be his grandchildren and great-grandchildren in whom interests in the trust properties might vest. It was submitted that, “[i]f an adopted child would have meant that the vesting period would have been extended, that would have correlated with his intentions”. It was further submitted that the will was about deferring the vesting date, as opposed to distinguishing between adopted children and non-adopted children. It was submitted that the testator must have been aware of the possibility of adoption in the future, given that the 1923 Act had introduced adoption in New South Wales before he made his last will.

50. As Kirby P (as his Honour then was) explained in Harris v Ashdown,[15] attitudes in relation to adoption have changed significantly over time. As his Honour recognised in that case, the problem of how to construe a will made many years ago – in this case, almost 100 years ago – cannot be solved by reference to present social attitudes to adoption. However, nor are prima facie rules of construction concerning the meaning of “child” and “children” conclusive. The will is to be construed in accordance with the principles I have referred to at [43] above. [16]

    15. (1985) 3 NSWLR 193.

    16. Ibid at 196-200.

51. Having regard to the fact that adoption was a relatively new feature of New South Wales society in 1925, I do not consider that the hypothetical reasonable person reading the testator’s will at that time would have understood the words “child” and “children” as including adopted children, in the absence of any express reference to adoption or adopted children. That conclusion is supported by s 127 of the 1923 Act, which is one circumstance surrounding the testator at the time the will was made. The reasonable person is taken to have been aware of that circumstance.

52. In my opinion, there is nothing in the language or structure of the will as a whole that would have caused the reasonable person to understand the words “child” and “children”, including where they appear in the phrase “the children of those who may then be dead”, [17] as including adopted children. I accept that it would have been plain to the reasonable person that the testator intended to extend the vesting date for as long as possible. However, I do not consider that this would have caused the reasonable person in 1925 to understand the words “child” and “children” as including adopted children, in the absence of any evidence of any surrounding circumstance that caused the testator to contemplate the possibility that the last survivor or his children or grandchildren alive at the date of his death – by reference to whose lifespan the postponement period is calculated – would be adopted. In my opinion, the relatively recent introduction of adoption in New South Wales in 1923 is not a surrounding circumstance that would have caused the reasonable person to infer that the testator contemplated the possibility that his future grandchildren and great-grandchildren may be adopted, and to therefore understand the words “child” and “children” in the will as referring to both adopted and non-adopted children.

    17. See [15]-[17] above.

53. As the plaintiffs’ submitted, the testator’s will excludes his “illegitimate” child William Offner Reinhard (and his descendants) from any interest in the trust properties. However, contrary to the plaintiffs’ submission, I do not consider that this has any rational bearing on whether the reasonable person in 1925 would have understood the testator as intending to exclude any future adopted grandchildren or great-grandchildren of the testator from receiving an interest in the trust properties. That is all the more so in circumstances where the testator also excluded one of his “legitimate” children – Joseph Henry Reinhard – from receiving an interest in his properties, and there is no evidence of the reason for that child’s exclusion. In short, there is no evidence of any surrounding circumstance that would have caused the reasonable person to understand that the testator intended that, on the expiry of the postponement period, interests in his real properties would vest in persons who may not be descended from him by birth. The testator’s objective of deferring the vesting date would not indicate to the reasonable person in 1925 that the testator held such an intention.

54. The submissions made on behalf of Ms Parmenter relied heavily on Harris v Ashdown, which concerned the construction of the words “child” and “children” in a will made on 20 July 1948. However, the present case is distinguishable from Harris v Ashdown in two important respects.

55. First, there is no evidence in the present case that the testator was aware when he made his will that there was a high probability that a future child or grandchild of one of his children would be adopted. Nor does the evidence provide a sufficient basis to infer that the testator even turned his mind to such a possibility. [18]

    18. (1985) 3 NSWLR 193 at 201-202 (Kirby P) and 205 (McHugh JA, as his Honour then was).

56. Second, adoption was an established feature of New South Wales society by 1948 when the will in Harris v Ashdown was made. [19] As I have already stated, adoption was a new feature of society when the testator made his will in the present case in May 1925.

    19. Ibid at 201 (Kirby P).

57. For all of those reasons, Ms Parmenter, as an adopted grandchild of the testator’s child John Thomas Reinhard, is not a person who might be entitled to an interest in the trust properties on the vesting date. Properly construed, the will does not expressly state that the “children” of the testator’s children who are to receive an interest in trust properties (and, by extension, the children of those children, being the testator’s great-grandchildren) include adopted children. Ms Parmenter is therefore not a necessary party to these proceedings, and her application to be joined as a defendant to the proceedings is dismissed.

The application to vary the vesting date

58. Division 3A of the Trustee Act 1925 (NSW) provides:

“86A

   Court order to approve arrangement

(1)    If property is held in trust under any instrument creating the trust, the Court may, if it thinks fit, by order approve any arrangement to—

(a)   vary or revoke all or any of the trust, or

(b)    enlarge the powers of the trustees for the purpose of managing or administering any of the property subject to the purpose of the trust.

(2)    An order under this section may be made by the Court only on behalf of—

(a)   any person under the trust having an interest directly or indirectly, or vested or contingent, who by reason of being a minor or other incapacity is incapable of assenting, or

(b)    any person who may become entitled, directly or indirectly, to an interest under the trust, and the entitlement is contingent on a future date or event that has not occurred at the time of application for an order under this section, or

(c)    any unborn person, or

(d)   any person in respect of any discretionary interest of the person under protective trusts where the interest of the principal beneficiary has not failed or determined.

(3)    This section—

(a)    extends to a trust created before the commencement of this section, and

(b)    does not apply to trusts affecting property created by another Act, and

(c) does not limit the operation of section 81.

(4)    In this section—

discretionary interest, in relation to protective trusts, means an interest arising under section 45(6).

principal beneficiary has the same meaning as in section 45.

protective trusts has the same meaning as in section 45.

86B   Court order to benefit person subject to application

(1) The Court must not approve an arrangement on behalf of any person under section 86A unless the carrying out of the order would be for the benefit of that person.

(2)   Subsection (1) does not apply to an approval of an arrangement under 86A(2)(d).

86C   Court may direct notice of application to certain persons

Notice of an application to the Court for an order under section 86A must be given to any persons as the Court may direct.”

59. Section 86A confers a broad power on the Court. The remedial nature of the legislation invites a liberal application of its text and militates against judicial gloss. [20]

    20. Re PDC [2021] NSWSC 1701 at [84]-[87] (Lindsay J).

60. An arrangement that the Court is asked to approve need not constitute an agreement. An arrangement may be a proposal propounded by the trustee on behalf of one or more persons falling within one of the classes in s 86A(2). [21]

    21. Perpetual Trustees v Barns at [25]-[27] (Williams AJA, Buchanan and Bongiorno JJA agreeing).

59. Section 86B requires that the arrangement be for the benefit of the persons on whose behalf the Court is asked to approve the arrangement, save for the exception in s 86B(2) for arrangements proposed on behalf of persons in s 86A(d). That exception is not relevant to the present case.

60. The Court must also be satisfied that the arrangement is a fair and proper one overall, taking into account the purpose of the trusts and the intention of the testator, and engaging in a businesslike assessment of the arrangement including considering the benefits and disadvantages of the arrangement overall. [22]

    22. Ibid at [36] and [40]; Re PDC at [87] (Lindsay J).

61. Courts have exercised the power under s 86A and its equivalent provisions in other jurisdictions to approve arrangements for the variation of vesting dates in trust deeds. [23]

    23. Campbell v Campbell [2022] NSWSC 554 (bringing forward the vesting date of a discretionary trust); In Re Plator Nominees [2012] VSC 284 (extending the vesting date of a trust); Coote v Clarke [2007] WASC 97 (extending the vesting date of a trust).

Consideration and determination

64. Section 86A applies to the testamentary trusts established by the testator’s will, notwithstanding that they were created prior to the commencement of the section. [24]

    24. Section 86A(3)(a).

65. The plaintiffs and at least those defendants referred to at [29] above are persons who may become entitled to an interest under at least one of the trusts, contingent on them being alive on the vesting date (or, in the case of Debbra Ann Bell, Allan William Bell, and James Herbert Bell, contingent on them being alive on the vesting date and their mother Maureen Francis Lavina Reinhard (Bell) predeceasing them prior to the vesting date). The application is made by the plaintiffs on behalf of themselves and each defendant who may become entitled to an interest under each trust.

66. I am satisfied that the arrangement in respect of each trust is for the benefit of each such person who may become entitled to an interest under that trust, and that it is a fair and proper arrangement overall.

67. It is clear from the provisions of the will that the testator’s principal intention was that his estate would be enjoyed by his children named in sub-clauses (1) to (8), as varied by the codicil, and would ultimately vest in the testator’s descendants beyond those named children. That is the primary object of the testamentary trusts. The postponement period is defined in such a way that the actual vesting date was not ascertainable by the testator at the time that he made the will, or at the time of his death. I infer from the testator’s failure to make any provision for distribution of the trust properties beyond his great-grandchildren that he did not foresee a real risk that the vesting period would extend beyond the longevity of those great-grandchildren. The evidence in these proceedings establishes a real risk that this will occur. [25] The arrangement to bring forward the vesting date of each trust to one business day after the determination of these proceedings will ensure that the testator’s primary intention is fulfilled.

    25. See [35] above.

68. The arrangement is inconsistent with the testator’s desire expressed in his will that farming, grazing and fruit growing activities should be carried on at “Ringaroo” and “Black Rock” in the same manner as in 1925. However, the testator realistically expressed this desire as being subject to the discretion of the Trustees. As recognised in Reinhard v Bell, that desire has already been defeated by the passage of time.

69. With the exception of Debbra Ann Bell, Allan William Bell, and James Herbert Bell, each party to these proceedings who may become entitled to an interest under one or more of the trusts will benefit directly from the arrangement because they will receive now an interest in the trust properties which was otherwise contingent on whether or not they survive a further ten years until 26 May 2034. The evidence does not disclose any corresponding disadvantages to those persons.

70. Debbra Ann Bell, Allan William Bell, and James Herbert will not benefit directly from the arrangement, and will be disadvantaged insofar as the arrangement will remove the possibility that they will become entitled to an interest in the trust properties. However, the arrangement will benefit their mother, who will receive now an interest in the trust properties which was otherwise contingent on her surviving until the age of 100 years. They have consented to the arrangement, and I infer from that consent that they consider this direct benefit to their mother to be indirectly beneficial to themselves, whether financially or otherwise, and that the overall arrangement is therefore for their benefit.

71. As I have noted earlier in these reasons, each other defendant to the proceedings also consents to the arrangement.

72. For all of those reasons, I am satisfied that this Court has power under s 86A of the Trustee Act to approve the arrangement in respect of each trust, and that it is appropriate in all the circumstances to exercise the discretion to do so.

Conclusion and orders

73. The orders of the Court are:

1. Order that the application of Ms Gae Parmenter to be joined as a defendant to these proceedings is dismissed.

2. By consent between the plaintiffs, the defendants and Ms Parmenter, make no order as to the costs of Ms Parmenter’s joinder application with the intention that Ms Parmenter will bear her own costs of that application, and the plaintiffs’ and the defendants’ costs of that application form part of their costs of the proceedings to be paid in accordance with order 4 below.

3. Order pursuant to s 86A of the Trustee Act 1925 (NSW) approving the arrangement to vary the trusts created by the last will and testament of the late William Gotlett Reinhard dated 2 May 1925 (as varied by codicil dated 30 January 1928) by deleting the words in the declaration on the first page of the will “until the period of twenty one years after the death of the last survivor of my children or grandchildren who shall be alive at the date of my death” and replacing the said words with the words “until the 1^st day of August in the year 2024”.

4. Order that the plaintiffs’ and the defendants’ costs of these proceedings be paid out of the Estate of the late William Gotlett Reinhard on an indemnity basis.

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Endnotes

Decision last updated: 31 July 2024