In the Will of

[1992] TASSC 119

Serial No B42/1992
List “B”

CITATION:   In the Will of Samuel Gray [1992] TASSC 119; B42/1992

PARTIES:  IN THE WILL OF SAMUEL JOHN GRAY

PUBLIC TRUSTEE

v

GRAY, Albert Henry & Ors

TITLE OF COURT:                  SUPREME COURT OF TASMANIA

JURISDICTION:  ORIGINAL

FILE NO:  M209/1992

DELIVERED:  7 October 1992

HEARING DATES:                   25 September 1992

JUDGMENT OF:  Cox J

CATCHWORDS:

Construction of will—Gift to children payable at the rate of £250 per annum—Gift over to issue of balance unpaid at death of child surviving testator—Whether void for repugnancy or in derogation of primary gift—Rule in Sanders v Vautier (1841) 4 Beav 115; 49 ER 282 held not applicable.

REPRESENTATION:

Counsel:

Plaintiff:  T Williams

Defendant Children:        S Quartermain

Defendant Grandchildren
living or as yet unborn:    S Carey

Solicitors:

Plaintiff:  Public Trustee

Defendant Children:        Simmons Wolfhagen

Defendant Grandchildren
living or as yet unborn:    Crown Solicitor

Judgment Category Classification:

Court Computer Code:

Judgment ID Number:              B42/1992

Number of paragraphs:            20

Serial No B42/1992

List "B"

File No M209/1992

IN THE WILL OF SAMUEL JOHN GRAY
PUBLIC TRUSTEE v ALBERT HENRY GRAY & ORS

REASONS FOR JUDGMENT  COX J

7 October 1992

1. Construction summons concerning the interpretation of the following will:

"THIS IS THE LAST WILL of me SAMUEL JOHN GRAY of Number 49 Pottery Road New Town in Tasmania retired builder

1        I APPOINT THE PUBLIC TRUSTEE OF TASMANIA (hereinafter called my trustee') to be sole executor and trustee hereof

2        AFTER PAYMENT of my debts funeral and testamentary expenses and all duties payable in respect of my estate I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal to my wife EDITH AGNES GRAY absolutely if she shall survive me

3        IF my said wife shall not survive me I GIVE DEVISE AND BEQUEATH the whole of my said estate to my trustee UPON TRUST to sell call in and convert the same into money and after payment of my debts funeral and testamentary expenses and all duties payable in respect of my estate in exoneration of every gift hereby made to stand possessed of the net proceeds to be derived from such sale calling in and conversion UPON TRUST for such of my children LAWRENCE SAMUEL GRAY ALBERT HENRY GRAY ISABEL SWEET HEATHER DOLLIVAN and ADOLPHUS JOHN GRAY as shall be living at my death and if more than one in equal shares except that the respective shares of the said LAWRENCE SAMUEL GRAY and the said ALBERT HENRY GRAY shall each be Three hundred pounds more than the shares of my other said children AND I DIRECT my trustee to pay the respective shares of my said children to each of them at the rate of Two hundred and fifty pounds per annum payable half yearly until the said shares shall be fully paid AND I DECLARE that if any of my said children shall die in my lifetime leaving issue who shall survive me such issue shall take and if more than one equally between them the share which his her or their parent would have taken of and in my estate if such parent had survived me BUT if my said children shall survive me but shall die before the share of and in my estate shall be fully paid to him or her and shall leave issue him or her surviving such issue shall take and if more than one equally between them the unpaid portion thereof to which his her or their parent would have been entitled if such parent had lived to receive the same

4        I REVOKE all prior wills and testamentary dispositions heretofore made by me and declare this to be my last will

IN WITNESS whereof I have hereunto set my hand this eighth day of May One thousand nine hundred and fifty nine

(signed) S J Gray

SIGNED by the testator the said SAMUEL JOHN GRAY as and for his last will in the presence of us both present at the same time who at his request in his presence and in the presence of each other have hereunto subscribed our names as witnesses

(signed) Jack D Bushby (signed) Donald S Ryan

Solicitor        Law Clerk

Hobart. Hobart."

1. Notwithstanding the fact that the testator described himself as a retired builder in 1959 when he made his will, he survived a further 32 years and died on 11 November 1991. His wife predeceased him, as did his son Lawrence Gray, who in turn was survived by a daughter Patricia Jean Young. The remaining children named in the will survived the testator. The present value of the estate is $127,542.08. In round figures the fund for each child is about $25,000. Paid at the rate of $500 per annum it will be 50 years before they receive the entirety of their shares, provided they live so long. I suspect that had the testator anticipated in 1959 that his estate would be of that value he would have nominated different annual payments or adopted a different formula for postponing the receipt by each beneficiary of his respective share. Nevertheless, the will is to be construed according to the language used and it is not for the Court to speculate what the testator might have done had he realised the effect inflation might have on the nominal value of his estate.

1. The disposition in clause 2 of the will in favour of his wife was unquestionably absolute provided she survived him. The whole of the estate was given, devised and bequeathed to her absolutely. In the third and operative clause, however, the devise and bequest was not made to the children "absolutely" but to the trustee upon trust for sale, payment of debts and expenses and then upon trust for the children in equal shares, save that two children were to receive shares £300 greater in value than the other three. There then follows a direction to pay the respective shares of his said children to each of them at the rate of £250 per annum payable half–yearly until the said shares shall be fully paid. The first substitutional provision by which Mrs Young succeeds to the share which would have been taken by Lawrence Gray had he survived the testator follows that direction. Had the will stopped there I am in no doubt that the setting aside of each fund upon trust for each child (or grandchild in the case of Mrs Young) would have been absolute and that notwithstanding the direction to pay the share to each by limited half–yearly payments, each child and Mrs Young would have been entitled to call for an immediate payment of his or her respective share under the principle expressed in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 and Gosling v Gosling (1859) Johns 265.

1. These cases, however, did not involve gifts over. It is clear law that where there is an absolute gift followed by a gift over, the gift over is void; but where the gift over is in truth a derogation from the original gift so as to cut down the interest given to a limited interest, then the gift over is good (Henderson v Cross (1861) 29 Beav 216; 54 ER 610 and Ritchie v Magree (1962–64) 114 CLR 173). In the present case I think the second substitutional provision at the end of cl4 does have the effect of cutting back the earlier seemingly absolute gift. The later provision refers to issue taking the unpaid portion of a share not fully paid to which portion the parent of such issue "would have been entitled if such parent had lived to receive the same". The later provision purports therefore to limit the extent of the earlier trust by emphasising that the beneficiary gains no entitlement to an unpaid portion until he survives to the date on which any such portion is payable. The second substitutional provision confers contingent interests on persons other than the defendants, leaving no room for the application of the rule in Gosling v Gosling (supra) (cf In Re Wilcox [1978] Tas SR 82).

1. The Canadian case of Re Bucovetsky [1943] 1 DLR 208 was cited in argument. There was a similar provision granting shares in a fund absolutely but with postponement of payments by way of a percentage of the whole rather than fixed sums until the attaining of certain ages. Hope J held that a simple direction for the deferment of payment of the principal in whole or in part should be rejected as repugnant to the enjoyment of a vested interest and that where the earlier gift is absolute, as it was there, any cutting down of it must be in clear and unequivocal terms with a resultant gift over. He found ambiguity in a provision which arguably cut down the earlier absolute gift for the condition that a beneficiary should die leaving issue was uncertain, the date of death not being fixed by reference to the death of a testator or the attaining of a number of different ages by the child.

1. In the present case no such ambiguity exists. Although the provision in question commences "but if my said children shall survive me", the remaining words make it quite clear that the words "any of" were intended to be inserted immediately after the words "but if". The gift over occurs in favour of the issue of a parent who dies after the testator dies and before his share in the estate is fully paid. If there are presently children of the four surviving children and substituted grandchild, as I was told from the Bar table there are, or if some are born hereafter (unlikely though that may be having regard to the ages of the parties) there are other persons with contingent interests.

1. With the wisdom of hindsight we may say that the testator was unwise to direct what now seem such paltry progressive payments of corpus to his beneficiaries, but the terms of the will are clear to my mind. He unequivocally cut back the interest he initially gave not merely postponing payments but giving over to the issue of his children any portion not paid to them at the time of their respective deaths and effectively describing these unpaid portions as not yet the subject of an entitlement to receive them.

1. The first question asked in the summons is:

"(i)are the children of the deceased vested at death with an absolute interest in their respective share which is payable immediately freed from any restriction or contingency"

The answer must be no.

1. The second question asked in the summons is:

"(ii)are they only entitled to receive payments at the rate of 250 pounds per annum with the issue of any child who dies being entitled in the manner to be determined?"

1. I think this should be amended to ask "are they only entitled to receive payments of corpus at the rate of 250 pounds per annum, etc" for different considerations apply in respect of income. The answer to this question is yes.

1. The third question is:

"(iii)     does the word issue' refer only to children or to all issue of any degree?"

1. The editors of Jarman on Wills, 8th ed, point out at 1587 that the word "issue" is frequently explained by the context to bear their restricted sense of children. They state:

"Where a will declares that in the event of the deaths of original devisees or legatees before a specified time, their issue shall take the shares which the father or mother of such issue would have taken if then living, it is obvious that issue must be construed to mean children."

And a clause substituting issue for their parents, it seems, has the same effect, the word parents' so used being considered to denote the original legatees, and not the parents of their issue remoter than children."

1. I think in the context of this will "issue" clearly means children only and no counsel argued otherwise.

1. Question (iv)(a) asks:

"(a)do the issue of any child who predeceased have the absolute interest in the share their parent would otherwise have taken or only a right to receive 250 pounds per annum?"

Taking that to mean "predeceased the testator" I am of the view that Mrs Young, the only person in this class, takes the share of her father, no more nor less, and thus is entitled along with his siblings to receive the capital of the fund set aside in respect of him progressively at the rate of £250 per annum.

1. Question (iv)(b) asks:

"(b)do the issue of any child who survived the deceased but die before his or her share has been fully paid out have an absolute interest in the unpaid portion of the share of their parent or only the right to receive 250 pounds per annum?"

The issue of any such child (including the issue of Mrs Young) have an absolute interest in the portion at the date of death of their parent. This flows from the plain words of the second substitutional provision "such issue shall take ... the unpaid portion thereof to which his her or their parent would have been entitled if such parent had lived to receive the same". Upon the death of such a parent the whole of the balance of the corpus is payable to that parents issue.

1. Question (iv)(c) is:

"(c)if such issue only have the right to receive 250 pounds per annum is this substitution provision void as infringing against the rule against perpetuities?"

1. It is unnecessary to answer this question.

1. Question (iv)(d) is:

"(d)is the income on any unpaid share accumulated or does it pass on a partial intestacy or is it payable to those from whose contingent share it arises?"

There is no direction in the will as to accumulation of income. The gift over derogates from the initial apparently absolute gift only to the extent that it plainly and unequivocally does so. The restriction on the absolute nature of the gift is that the corpus is only to be paid and appropriated to each child at the rate of £250 per annum, otherwise the fund is intended for the benefit of the child concerned. In my view, therefore, each child (and Mrs Young) is entitled to the entire income of his or her fund in addition to capital advances of £250 per annum during his or her life. In Re Couturier; Couturier v Shea [1907] 1 Ch 470 Joyce J, at 473, said:

"Where a legacy is directed to be set apart for the legatee without more, that, in my opinion, is sufficient to carry the income from the date of the setting apart unless a contrary intention appears by the will."

1. Another way of looking at the gift to the children in the absence of any provision in the gift over in respect of income is to treat the otherwise absolute gift as cut down by the gift over to a life interest in the fund with advances of capital at the rate of £250 per annum, the gift over being only of the unpaid remaining corpus.

1. Questions (iv)(e) and (f) are predicated on an accumulation of income and are therefore unnecessary to answer.