Johnston v Johnston

The High Court of Australia considered the dispute between Johnston and Johnston concerning the interpretation of a will. The primary issue before the Court was whether a specific bequest of shares in a company, which had undergone a capital reconstruction prior to the testator's death, should be construed as referring to the shares as they existed at the time of the will's execution or as they were constituted after the reconstruction.

The Court was required to determine the proper construction of the testamentary instrument in light of the changes to the company's share structure. Specifically, the legal question was whether the testator's intention, as expressed in the will, was to bequeath a specific number of original shares or the equivalent value or entitlement represented by those shares following the capital reconstruction.

The High Court held that the testator's intention was to be ascertained by reference to the will as it stood at the time of its execution, but that the subject matter of the bequest must be identified at the time of the testator's death. In this instance, the capital reconstruction had fundamentally altered the nature and number of the shares. The Court applied the principle that a bequest of specific shares refers to the shares as they exist at the testator's death, and if those shares have been so altered as to be no longer identifiable, the bequest may fail. However, the Court found that the testator's intention was to pass on the entitlement represented by the original shares, which had been transformed into a different class and number of shares through the reconstruction. Therefore, the bequest was held to be effective, referring to the shares as they were constituted at the time of the testator's death, reflecting the testator's underlying intention to bequeath the proprietary interest in the company.