Lempens v Reid - [2009] SASC 179

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction: Application)
LEMPENS v REID & ORS
[2009] SASC 179
Judgment of The Honourable Justice Gray
2 July 2009
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - GENERALLY - UNCERTAINTY AND FAILURE TO DISPOSE - IN RESPECT OF OBJECT OF GIFT
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - GENERALLY - GIFTS TO A CLASS - WHAT IS A CLASS
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - GENERALLY - GENERAL PRINCIPLES OF CONSTRUCTION - PRESUMPTION AGAINST INTESTACY
Application for direction pursuant to Rule 206 of the Supreme Court Civil Rules 2006 (SA) - construction of clause of will regarding gift of residue of estate - whether gift "to such of them my friends who resided with me from overseas" void for conceptual uncertainty - whether void for evidential uncertainty - consequence of uncertainty - application of hotchpot - whether costs of matter to be met from that half of residuary estate the subject of the application.
Held: gift of half of residue void for conceptual uncertainty - gift void for evidential uncertainty - half of residuary to be distributed to next of kin under an intestacy - hotchpot applies - beneficiary of other half of residuary precluded from recovery under partial intestacy -costs of application to be met from whole of residuary estate.
Supreme Court Civil Rules 2006 (SA) r 206; Wills Act 1936 (SA) s 25AA; Administration and Probate Act 1919 (SA) s 72B, s 72G, s 72J and s 72K, referred to.
Re Newman deceased [1967] VR 201; Lewis v O’Loughlin (1971) 125 CLR 320; Re Harrison (1885) 30 Ch D 390; In the Estate of Rigg, Deceased [1960] SASR 197; Fell v Fell (1922) 31 CLR 268; In the Estate of Tkaczuk (deceased); Dobryden vWagner and Association of Ukrainians in SA Inc (2004) 90 SASR 515; In re Lloyd’s Trust Instruments (Megarry J, unreported, 24 June 1970); In Re Edwards [1906] 1 Ch 570; In re Baden’s Deed Trusts [1971] AC 424; In re Gulbenkian’s Settlements [1970] AC 508; Coogan v Haydn (1879) 4 LR IR 585; In re Gibbard’s Will Trusts; Public Trustee v Davis [1967] 1 WLR 42; In re Barlow’s Will Trusts [1979] 1 WLR 278; Re Connor (1970) 10 DLR (3d) 5 (Supreme Court of Alberta); Re Benjamin; Neville v Benjamin [1902] 1 Ch 723; Re Eden deceased [1957] 2 All ER 430; In re Baden’s Deed Trusts (No 2) [1973] 1 Ch 9, considered.

LEMPENS v REID & ORS
[2009] SASC 179
Testamentary Causes Jurisdiction
GRAY J.

This is an application for direction pursuant to Rule 206 of the Supreme Court Civil Rules 2006 (SA) as to the construction of the will of Walter Ronald James, the deceased.
By summons filed 17 July 2008, and subsequently amended on 22 April 2009, the plaintiff Robert Lempens, the executor of the estate of the deceased, applied to this Court for the determination of the construction of clause 4 of the will of the deceased. Clause 4 provides:
I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal of whatsoever kind and wheresoever situate unto my Trustee UPON TRUST to pay therefrom my just debts funeral and testamentary expenses and all death estate and succession duties State or Federal upon whole of my dutiable estate to hold the residue then remaining UPON TRUST as to one half thereof to my brother BRIAN [sic] CLIFFORD JAMES in the event that my brother should die before me I leave this share to my niece. I GIVE the remaining half of my estate to such of them my friends who resided with me from overseas.
The questions posed to the Court are whether the gift of half of residue in the estate made “to such of them my friends who resided with me from overseas” is void for uncertainty, and, if the gift is uncertain, to whom should the gift of half of the residue be distributed. All the evidence adduced to support the application is by affidavit.
Prior to the hearing of the matter, a further question raised was whether there is evidence otherwise not admissible in respect of the construction of the will of the testator’s intention so as to permit the Court to rectify the will pursuant to section 25AA of the Wills Act 1936 (SA). However, on the hearing of the matter, the application for rectification was abandoned.
The second defendant, the deceased’s brother Bryne Clifford James, sought directions that the persons described in the subject gift are not entitled to any portion of the estate, and that the costs of the action including the legal costs of the parties incidental to the action, be met from that portion of the estate that is left to those “friends” who resided with the deceased from overseas.
Background Facts
On 22 June 2005, the deceased instructed his solicitor Robert Lempens of Camatta Lempens, to prepare his will. The following day, Mr Lempens recorded the deceased’s instructions in the form of a statement, which included the following:
I then want with the Will all of my debts to be paid and with the residue I want one half to go to my brother Brian [sic] Clifford James who lives in England.
As to the other half I wish to give to four of my friends whose details I will drop off to my solicitor next Thursday.
On 28 June 2005, Mr Lempens wrote to the deceased confirming the instructions whereby half of the deceased’s estate was to be given to Bryne Clifford James, and the other half to four friends whose names and addresses were to be provided shortly.
A will was prepared and duly executed by the deceased on 7 July 2005. When the deceased attended to execute the will, Mr Lempens asked if the details of the friends from overseas were available. As they were not, Mr Lempens asked the deceased to sign the document which had been prepared, on the understanding that the deceased would provide the details of the friends from overseas on his next visit. On the same day, Mr Lempens wrote to the deceased requesting the full names and addresses of the “friends” to whom the deceased wished to leave half his estate. No response was received from the deceased before his death on 14 February 2007.
On 31 May 2007 probate of the will was granted to Mr Lempens.
Mr Lempens, as executor, has caused investigations to take place in an attempt to ascertain the existence of any member of the class of beneficiary designated in the will as “such of them my friends who resided with me from overseas”.
On 26 April 2007, the solicitor for Mr Lempens caused to be entered in the public notices section of the Advertiser newspaper, a notice as to the death of the deceased, requesting all interested persons, debtors and creditors to contact the office of the solicitors with any information.
On 2 May 2007, the solicitor spoke with John Ferme Reid, the other executor named in the will. Mr Reid was unable to provide any information about persons who might be within the subject category. On 17 February 2009, the solicitor again spoke with Mr Reid regarding information as to “friends from overseas”, but aside from naming two possible persons, Mr Reid was unable to provide further information.
On 5 October 2007, the solicitor sent a letter to 32 possible beneficiaries from names and addresses gleaned from private diaries, notebooks and address books obtained from the deceased’s possessions. The letter requested each of the recipients to provide evidence of their claim should they wish to assert their position as a beneficiary, and to provide any information in relation to other people from overseas who might be potential candidates. Eight responses were received. Many of the letters sent were “returned to sender”. The recipients who replied to the correspondence provided information in relation to whether they would be able to fit the category of beneficiary as described in clause 4. The responses primarily indicated that the recipients did not consider themselves to be a person whom the deceased intended to benefit under his will. Several of the recipients provided further details of possible persons whom the deceased intended to benefit, however none of these candidates have come forward with evidence of the testator’s intention.
The persons who expressed interest and provided some information in relation to the deceased were from Japan, Indonesia, Thailand and New Zealand. Further to the attempts outlined above, the solicitors have approached the Consulates of Japan, Indonesia and Thailand in Australia, to determine suitable newspapers with national distribution in which to place advertisements seeking information. Other investigations on the Internet for a national Japanese publication indicated that publication might be prohibitively expensive. A suitable New Zealand publication was located.
Although not all avenues of inquiry have been exhausted, from the investigations outlined above, there appears to be no person who answers the description of the “friends” named in the will.
Further inquiries made by the solicitor ascertained the next of kin of the deceased who would benefit in the event of a partial intestacy of the residual estate. The relatives of the deceased were Bryne James, Margaret Dawn Blight deceased with no issue, Maureen Valma Wood deceased, with issue Carol Allmond and Joyleen Murphy, Frederick Ernest James deceased, with issue Jesse James, Patricia Lynn Collins, Roslyn Ann Jordan and Paul James. The implications of an intestacy and hotchpot will be discussed later in these reasons.
On 21 January 2009, Bryne James, received an interim distribution of $60,000.00. The sum of $93,818.25 is currently held in a Cash Management Account, and a further sum of $1,793.75 is held in the trust account of Camatta Lempens.
Hearing of the Matter
Prior to the hearing of the matter, independent counsel were appointed by the Court to appear on behalf of the next of kin, and to represent the interests of the “friends” described in clause 4. Consequently, those interests were protected on the hearing of the matter, along with those of the plaintiff and Bryne James, who were also represented.
The parties agreed that the primary issue to be determined was whether the gift in clause 4 of “the remaining half of my estate to such of them my friends who resided with me from overseas” was void for uncertainty. It was accepted that if this gift were held to be void for uncertainty, a partial intestacy would result. As a consequence, that portion of the estate would fall to be distributed in accordance with the intestacy provisions in Part 3A of the Administration and Probate Act 1919 (SA).
The presumption that a testator does not wish to die intestate, or that a partial intestacy would not have been intended, can be used as an aid to construction in the event of ambiguity in the will.[1] In Re Newman deceased[2] Starke J went so far as to suggest that:
The Court is … reluctant to hold a gift void for uncertainty, and adopts the benevolent rule that if there is ever so little reason in favour of one construction of an ambiguous gift more than another, the adoption of the construction so favoured is at least nearer the intention of the testator than that the whole disposition should be void and the persons entitled on an intestacy let in.
A gift should not be held void for uncertainty if a reasonable meaning can be given to it.[3]   However, the presumption against intestacy cannot overcome all ambiguities or uncertainties - the presumption cannot lead the court “to do otherwise than construe plain words according to their plain meaning”.[4]
[1]    Lewis v O’Loughlin (1971) 125 CLR 320 at 330-331; Re Harrison (1885) 30 Ch D 390 at 393-394; In the Estate of Rigg, deceased [1960] SASR 197 at 198; Fell v Fell (1922) 31 CLR 268; In the Estate of Tkaczuk (deceased); Dobryden v Wagner and Association of Ukrainians in SA Inc (2004) 90 SASR 515.
[2]    Re Newman deceased [1967] VR 201 at 203.
[3]    See discussion in In re Lloyd’s Trust Instruments (Megarry J, unreported, 24 June 1970) passages of which are extracted in Brown v Gould [1972] 1 Ch 53 at 56-57.
[4]    In Re Edwards [1906] 1 Ch 570 per Romer LJ at 574.
Construction of Clause 4
When assessing whether the description of “friends” is void for uncertainty, it is important to distinguish conceptual uncertainty from the difficulty of ascertainment.[5] If a gift fulfils the requirements of conceptual or “linguistic” certainty, the gift will not be invalid merely because there may be practical difficulties in ascertaining the whereabouts or continued existence of some of the relevant persons, that is, “evidential uncertainty”.[6] As Megarry J stated in In re Lloyd’s Trust Instruments:[7]
Where the concept is uncertain, the gift is void. Where the concept is certain, then mere difficulty in tracing and discovering those who are entitled normally does not invalidate the gift.
[5]    In re Baden’s Deed Trusts [1971] AC 424 at 457 (Lord Wilberforce).
[6]    In re Gulbenkian’s Settlements [1970] AC 508 at 524G.
[7]    In re Lloyd’s Trust Instruments (Megarry J, unreported, 24 June 1970). Quoted in Brown v Gould [1972] 1 Ch 53 at 57.
A gift to “friends” of the deceased is not necessarily void for uncertainty. In some contexts gifts to “friends” have been regarded as valid. One approach has been to interpret “friends” as meaning relations or next-of-kin or “persons united by the tie of kindred”.[8] This approach is of no assistance in the present case, as the evidence indicates that the testator was not intending to refer to family members who resided with him from overseas.
[8] Coogan v Haydn (1879) 4 LR IR 585 at 592.
In In re Coates deceased, the Court held that the conferral in the will of a power in an executor to select “friends” to benefit was not void for uncertainty.[9] This finding was made in the context of a bare power where there was no duty to select. In the course of his decision, Roxburgh J observed:[10]
Friendship, of course, draws a picture particularly blurred in outline, but its context, and the circumstances of the case – and a circumstance that I have particular regard to is the power of appointment vested in the testator’s widow – may well fill in what would otherwise be vague.
Similarly, in In re Gibbard’s Will Trusts,[11] a bare power to appoint to “any of my old friends” was upheld as sufficiently certain, even though the complete class was not ascertainable. This finding was held to be available since it would not be difficult for claimants to show that they were within the relevant description of the class.[12] These circumstances are to be contrasted with those of the present proceedings where the executor has no discretion to select individual members from the class of “friends” described in clause 4.
[9] In re Coates deceased, Ramsden v Coates [1955] 1 Ch 495.
[10] In re Coates deceased, Ramsden v Coates [1955] 1 Ch 495 at 499.
[11] In re Gibbard’s Will Trusts; Public Trustee v Davis [1967] 1 WLR 42.
[12] In re Gibbard’s Will Trusts; Public Trustee v Davis [1967] 1 WLR 42.
The class of “friend” may be conceptually uncertain since there are many different degrees of friendship, and such a description may be arrived at subjectively.[13] The difficulties with defining a class of beneficiary as “friends” were highlighted by Lord Upjohn in Re Gulbenkian’s Settlements:[14]
…suppose the donor directs that a fund, or the income of a fund, should be equally divided between members of a class. That class must be as defined as the individual; the court cannot guess at it. Suppose the donor directs that a fund be divided equally between “my old friends”, then unless there is some admissible evidence that the donor has given some special “dictionary” meaning to that phrase which enables the trustees to identify the class with sufficient certainty, it is plainly bad as being too uncertain. Suppose that there appeared before the trustees (or the court) two or three individuals who plainly satisfied the test of being among “my old friends,” the trustees could not consistently with the donor's intentions accept them as claiming the whole or any defined part of the fund. They cannot claim the whole fund for they can show no title to it unless they prove they are the only members of the class, which of course they cannot do, and so, too, by parity of reasoning they cannot claim any defined part of the fund and there is no authority in the trustees or the court to make any distribution among a smaller class than that pointed out by the donor. The principle is, in my opinion, that the donor must make his intentions sufficiently plain as to the objects of his trust and the court cannot give effect to it by misinterpreting his intentions by dividing the fund merely among those present. Secondly, and perhaps it is the most hallowed principle, the Court of Chancery, which acts in default of trustees, must know with sufficient certainty the objects of the beneficence of the donor so as to execute the trust.
[13] See eg In re Gulbenkian’s Settlements [1970] AC 508 at 523-524 (Lord Upjohn).
[14] In re Gulbenkian’s Settlements [1970] AC 508 at 524.
The concept of what friendship entails was discussed in In re Barlow’s Will Trusts[15] in the context of an option given in a will to family and “friends” of the deceased, to purchase the testatrix’s pictures. The potential class of friends was not completely ascertainable, but the option was held valid. In the course of his decision Browne-Wilkinson LJ stated:[16]
Although it is obviously desirable as a practical matter that steps should be taken to inform those entitled to the options of their rights, it is common ground that there is no legal necessity to do so. Therefore, each person coming forward to exercise the option has to prove that he is a friend; it is not legally necessary, in my judgment, to discover who all the friends are. In order to decide whether an individual is entitled to purchase, all that is required is that the executors should be able to say of that individual whether he has proved that he is a friend. The word 'friend', therefore, is a description or qualification of the option holder.
It was suggested that by allowing undoubted friends to take I would be altering the testatrix's intentions. It is said that she intended all her friends to have a chance to buy any given picture, and since some people she might have regarded as friends will not be able to apply, the number of competitors for that picture will be reduced. This may be so; but I cannot regard this factor as making it legally necessary to establish the whole class of friends. The testatrix's intention was that a friend should acquire a picture. My decision gives effect to that intention.
I therefore hold that the disposition does not fail for uncertainty, but that anyone who can prove that by any reasonable test he or she must have been a friend of the testatrix is entitled to exercise the option. Without seeking to lay down any exhaustive definition of such test, it may be helpful if I indicate certain minimum requirements: (a) the relationship must have been a long-standing one; (b) the relationship must have been a social relationship as opposed to a business or professional relationship; (c) although there may have been long periods when circumstances prevented the testatrix and the applicant from meeting, when circumstances did permit they must have met frequently. If in any case the executors entertain any real doubt whether an applicant qualifies, they can apply to the court to decide the issue.
The decision of Browne-Wilkinson LJ can be contrasted with that of Lord Upjohn in Re Gulbenkian’s Settlement. The option to purchase the testatrix’s pictures was not a divisible asset in the manner that a fund to be divided between friends might be, and as a consequence, the ascertainment of each member of the class of “friends” was not required in order to give effect to the testatrix’s intention.
[15] In re Barlow’s Will Trusts [1979] 1 WLR 278.
[16] In re Barlow’s Will Trusts [1979] 1 WLR 278 at 282.

Counsel for Bryne James contended that in the present case, if the “friends” referred to in clause 4 of the will of the deceased were to hold in joint tenancy, the decision of Browne-Wilkinson LJ might be analogous. Counsel submitted that prima facie, the “friends” named in clause 4 take as joint tenants, as the clause is silent as to whether the persons described as “friends” take the gift as joint tenants or tenants in common and there are no words of division such as that the members of the class take in “equal shares”. Counsel drew attention to the following comments in Williams on Wills :[17]
Where property is given to several persons concurrently, the questions whether those persons take as joint tenants or tenants in common,[18] and in the latter case in what shares they take,[19] depend on the context of the whole will. Prima facie they take as joint tenants,[20] but it has been said that, in considering the context, anything in the slightest degree indicating an intention to divide the property negatives the idea of a joint tenancy,[21] and in a case of ambiguity the court leans to the construction which creates a tenancy in common in preferences to that which creates a joint tenancy.[22]
[17] C.H Sherrin, R F D Barlow and R A Wallington (eds), Williams on Wills (7^th ed, 1995) at 767.
[18] A simple gift to A and B without more is a joint tenancy and it is upon those setting up a tenancy in common to show from the context that the words are not to have that meaning: Crooke v De Vandes (1803) 9 Ves 197. On the other hand anything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy and to create a tenancy in common: Robertson v Fraser (1871) 6 Ch App 696, and the court has favoured a tenancy in common rather than a joint tenancy: Billing v Billing (1895) 11 TLR 502.
[19] Robertson v Fraser (1871) 6 Ch App 696 at 700; Fisher v Anderson (1879) 4 SCR 406, at 419. Formerly a husband and wife were regarded as one person in reckoning such shares: Re Jeffrey, Nussey v Jeffrey [1914] 1 Ch 375; but now they are treated as two persons for all purposes of the acquisition of property: Law of Property Act 1925, s 37, 37 Halsbury’s Statutes (4^th edn) 121.
[20] Morley v Bird (1798) 3 Ves 628; Stuart v Bruce (1798) 3 Ves 632; Ritchie’s Trustees v M’Donald (1915) SC 501; Re Clarkson, Public Trustee v Clarkson [1915] 2 Ch 216; Re Bancroft, Eastern Trust Co v Calder [1936] 4 DLR 571. See also Re Boyd (1969) 6 DLR (3d) 110. A gift to A and.or B was construed as a joint tenancy: Re Lewis, Goronwy v Richards [1942] Ch 424, [1942] 2 All ER 364.
[21] Re Wooley, Wormald v Woolley [1903] 2 Ch 206. The mere fact that the interest is to be divided is not sufficient to make a tenancy in common of the capital: Crooke v De Vandes (1803) 9 Ves 197 at 206. A description of the donees as ‘joint tenants’, although a technical description, is not necessarily fatal to a tenancy in common: Booth v Alington (1857) 27 LJ Ch 117; and the words ‘equally as joint tenants’ have been held to create a tenancy in common: Rentoul v Rentoul [1944] VLR 205. As to expressions indicative of a tenancy in common, see Re Dunn, Carter v Barrett [1916] 1 Ch 97; Re Ward, Partridge v Hoare-Ward [1920] 1 Ch 334; and Re Peter’s Will (1967) 63 WWR 180.
[22] Jolliffe v East (1789) 3 Bro CC 25; Re Woolley, Wormald v Woolley [1903] 2 Ch 206 at 211; Bennett v Houldsworth (1911) 104 LT 304; Re Fisher, Robinson v Eardley [1915] 1 Ch 302.
If members of the class take as joint tenants then it is not essential for validity of the gift that all the members of the class be ascertainable exhaustively, as the quantum of each friend’s share does not depend on how many friends there are. Consequently it is not necessary to ascertain all persons intended to be benefited by the testator if effect is to be given to the gift. Counsel submitted that to construe clause 4 as gifting the residue to “friends” in a joint tenancy would support the presumption that the deceased did not intend to die intestate. Counsel accepted that if the gift is construed as a gift to the “friends” as tenants in common, the uncertainty of identity of the members of the class of beneficiaries would likely lead to the gift failing.[23] An example of such failure is found in the Canadian decision of Re Connor[24] in which the gift of residue was to be “divided among my close friends in such a way and at such time as my trustee in her discretion should determine”. The majority held this gift was void for uncertainty because it was not possible to ascertain the whole class of “close friends”.
[23] See eg Re Connor (1970) 10 DLR (3d) 5 (Supreme Court of Alberta).
[24] Re Connor (1970) 10 DLR (3d) 5 (Supreme Court of Alberta).
A further uncertainty inherent in the phrase “to such of them my friends who resided with me from overseas”, was highlighted by counsel appointed to represent the interests of the next of kin of the deceased. Counsel submitted that rather than narrowing the class of potential beneficiary, the use of the words “resided with me from overseas” created further difficulties in respect of the meaning of residence.
The question of what amounts to “reside” is both subjective and ambiguous. Clause 4 does not specify whether those who resided with the deceased did so in some form of personal or sexual relationship, or were merely tenants or friends. No specification as to the length of time of that residence was provided. It is unclear whether a fleeting stay would amount to “reside” or whether a more significant timeframe was intended. In addition, having regard to the evidence suggesting that a significant number of overseas students either rented or stayed with the deceased for varying lengths of time, the requirement of “from overseas” does not appreciably narrow the potential class of beneficiary.
In light of the above considerations, the gift of “the remaining half of my estate to such of them my friends who resided with me from overseas” fails for conceptual uncertainty. The identification of a class of beneficiary as outlined in clause 4 cannot be ascertained with requisite certainty.
It is convenient at this juncture to discuss whether, if the class of beneficiary were held to be conceptually certain, the description would satisfy the requirements of evidential certainty.
If conceptual certainty were established, an order in the nature of a Re Benjamin order might be appropriate. This type of order takes its name from its genesis, Re Benjamin; Neville v Benjamin.[25] The effect of a Re Benjamin order is to enable the executor to distribute the estate to those members of the class which have been ascertained at the time of distribution, whilst ensuring protection of the executor if a person entitled to a portion of the estate subsequently appears. If such a person does appear, he or she is not entitled to make a claim against the executor for that portion but may claim against beneficiaries who have been paid incorrectly.[26] If a Re Benjamin type order were considered appropriate in the circumstances of these proceedings, it may be necessary for the Court to order that further enquiries be undertaken, to ascertain whether members of the class can be located, prior to any distribution of the gift contained in the subject clause.
[25] Re Benjamin; Neville v Benjamin [1902] 1 Ch 723 (Joyce J).
[26] David M Haines, Succession Law in South Australia (2003) at [25.7].
A number of authorities suggest that in the face of conceptual certainty, extensive and wide ranging enquiries should be undertaken to determine whether the beneficiaries can be identified, despite the fact that these inquiries may potentially consume all or a large part of the fund.[27] In the present proceedings, although the investigations seeking potential beneficiaries undertaken to date have not exhausted every avenue of inquiry, no person satisfying the subject class of beneficiary described in clause 4 has been located. In these circumstances, the gift to those “friends” in clause 4, if not otherwise void, would fail for evidential uncertainty. Although the fact that it may be difficult to ascertain the whereabouts or continued existence of some of the members of a sufficiently defined class will not defeat a gift, the failure to identify a single individual who may fall into the class will result in the failure or lapse of the gift. A Re Benjamin type order is not appropriate in the circumstances as distribution of the gift requires the identification of some person or persons who fit the description of “such of them my friends who resided with me from overseas”.
[27] Re Eden deceased [1957] 2 All ER 430 at 435; In re Baden’s Deed Trusts (No 2) [1973] 1 Ch 9 at 20 (Sachs LJ).
Intestacy and Hotchpot
As discussed earlier, the consequence of a finding of uncertainty leads to a partial intestacy. Where the gift of a share in residue fails, prima facie the lapsed share does not increase the other shares of residue, but instead passes on an intestacy.[28] There is nothing in the will to displace this prima facie position. Consequently, on the failure of the gift to “friends”, their share of the residue does not pass to the other residuary beneficiary, Bryne James, under clause 4 of the Will. That portion of the residuary estate should be distributed in accordance with the intestacy provisions of the Administration and Probate Act, and the benefit should flow to the identified next of kin. As a consequence, half of the residue of the estate will be distributed according to sections 72B, 72G and 72J of the Administration and Probate Act.
[28] C.H Sherrin, R F D Barlow and R A Wallington (eds), Williams on Wills (7^th ed, 1995) at 486.
Counsel appointed to represent the interests of the next of kin of the deceased submitted that in these circumstances, an issue of hotchpot arises. Section 72K of the Administration and Probate Act continues the application of common law hotchpot, and provides:
(1)     Where—
(a)     an intestate has within the period of five years immediately before his death made any gift to, or settlement for the benefit of, a person (other than a spouse or domestic partner of the intestate) who is, or would if he were to survive the intestate become, entitled to a part of the intestate estate; or
(b)     a person who dies partially intestate leaves a will containing a gift in favour of a person (including a spouse or domestic partner of the intestate) who is entitled to part of the intestate estate,
the property given or settled shall be taken to have been given or settled in or towards satisfaction of the share to which that person is entitled in the intestate estate, or to which he would become entitled if he were to survive the intestate (as the case may be) unless—
(c)     the contrary intention was expressed, or appears from the circumstances of the case; or
(d)     the value of the property given or settled does not exceed one thousand dollars.
(2)For the purposes of subsection (1) of this section, the value of property given or settled by an intestate in his lifetime shall be determined as at the date of the gift or settlement.
Bryne James takes the gift specified in the first part of clause 4, that is, half of the residue of the estate. Section 72K operates such that the gift satisfies entirely any entitlement he may have had to share as next of kin in the partial intestacy. The exceptions to the rule do not apply. No contrary intention was expressed and neither is such intention apparent from the circumstances of the case, and the value of the property given to Bryne Clifford James exceeds one thousand dollars.
Costs of the action
As noted above, the named beneficiary of half the residue, Bryne James, sought an order that the costs of the proceedings be met from that half of the residue gifted to those “friends” from overseas. Counsel for Bryne James submitted that the testator was clear in his intention to leave one half of the residue estate to Bryne James. As a consequence, the need to seek directions from the Court as to the construction of clause 4 arose only in relation to the gift to “friends”. Counsel contended that as a consequence, all costs of the inquiry should be met from that portion of the estate.
In my view, this contention should be rejected. Ordinarily, the costs of seeking directions from a Court to construe a provision are met from the whole of the estate. The gift to Bryne James is not a specific legacy. He is to receive one half of the residuary estate, regardless of the precise quantum or composition. That residuary interest is subject to the usual vagaries of the administration of the estate and the amount that is gifted is what is left over after all of the proper expenses of the estate have been incurred and accounted for.
The costs of all parties in these proceedings are a proper expense arising from the administration of the estate and should be met from that estate.
Conclusion
Having regard to the foregoing, I am satisfied that the gift of the residuary estate of the will of the deceased intended to benefit “such of them my friends who resided with me from overseas”, fails for conceptual uncertainty. I further consider that if conceptual certainty were to be established, the gift would fail for evidential uncertainty. The failure of this gift results in a partial intestacy. As a consequence, one half of the residuary estate is to be distributed according to Part 3A of the Administration and Probate Act. Having regard to the terms of clause 4, I consider that the principle of hotchpot applies. As a consequence, Bryne James is precluded from sharing in the division of the residuary estate under the partial intestacy.